Exhibit 10.4
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LOAN AND SECURITY AGREEMENT
BY AND BETWEEN
XXXXXX'X RESTAURANT GROUP, INC.
AS BORROWER,
AND
XXXXX FARGO FOOTHILL, INC.
AS LENDER
DATED AS OF JULY 7, 2003
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LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this "Agreement"), is entered into
as of July 7, 2003, between XXXXX FARGO FOOTHILL, INC., a California corporation
("Lender") and XXXXXX'X RESTAURANT GROUP, INC., a Delaware corporation
("Borrower").
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 DEFINITIONS. As used in this Agreement, the following terms shall have
the following definitions:
"ACCOUNT" means an account (as that term is defined in the Code), and
any and all supporting obligations in respect thereof.
"ACCOUNT DEBTOR" means any Person who is obligated under, with respect
to, or on account of, an Account, chattel paper, or a General Intangible.
"ACH TRANSACTIONS" means any cash management or related services
(including the Automated Clearing House processing of electronic funds transfers
through the direct Federal Reserve Fedline system) provided by a Bank Product
Provider for the account of Borrower or its Subsidiaries.
"ADDITIONAL DOCUMENTS" has the meaning set forth in SECTION 4.4(c).
"ADVANCES" has the meaning set forth in SECTION 2.1(a).
"AFFILIATE" means, as applied to any Person, any other Person who,
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person. For purposes of
this definition, "control" means the possession, directly or indirectly through
one or more intermediaries, of the power to direct the management and policies
of a Person, whether through the ownership of Stock, by contract, or otherwise;
PROVIDED, HOWEVER, that, for purposes of SECTION 7.13 hereof: (a) any Person
which owns directly or indirectly 10% or more of the Stock having ordinary
voting power for the election of directors or other members of the governing
body of a Person or 10% or more of the partnership or other ownership interests
of a Person (other than as a limited partner of such Person) shall be deemed an
Affiliate of such Person, (b) each director (or comparable manager) of a Person
shall be deemed to be an Affiliate of such Person, and (c) each partnership or
joint venture in which a Person is a partner or joint venturer shall be deemed
an Affiliate of such Person.
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"AGREEMENT" has the meaning set forth in the preamble to this
Agreement.
"APPLICABLE PREPAYMENT PREMIUM" means, as of any date of
determination, an amount equal to (a) during the period from and after the date
of the execution and delivery of this Agreement up to the date that is the first
anniversary of the Closing Date, 3.0% TIMES the Maximum Revolver Amount, (b)
during the period from and including the date that is the first anniversary of
the Closing Date up to the date that is the second anniversary of the Closing
Date, 2.0% TIMES the Maximum Revolver Amount, (c) during the period from and
including the date that is the second anniversary of the Closing Date up to the
date that is the third anniversary of the Closing Date, 1.0% TIMES the Maximum
Revolver Amount, and (d) from and after the third anniversary of the Closing
Date, zero ($0).
"ASSIGNEE" has the meaning set forth in SECTION 14.1(a).
"AUTHORIZED PERSON" means any officer or employee of Borrower.
"AVAILABILITY" means, as of any date of determination, the amount that
Borrower is entitled to borrow as Advances hereunder (after giving effect to all
then outstanding Obligations (other than Bank Product Obligations) and all
sublimits and reserves then applicable hereunder).
"BANK PRODUCT" means any financial accommodation extended to Borrower
or its Subsidiaries by a Bank Product Provider (other than pursuant to this
Agreement) including: (a) credit cards, (b) credit card processing services, (c)
debit cards, (d) purchase cards, (e) ACH Transactions, (f) cash management,
including controlled disbursement, accounts or services, or (g) transactions
under Hedge Agreements.
"BANK PRODUCT AGREEMENTS" means those agreements entered into from
time to time by Borrower or its Subsidiaries with a Bank Product Provider in
connection with the obtaining of any of the Bank Products.
"BANK PRODUCT OBLIGATIONS" means all obligations, liabilities,
contingent reimbursement obligations, fees, and expenses owing by Borrower or
its Subsidiaries to any Bank Product Provider pursuant to or evidenced by the
Bank Product Agreements and irrespective of whether for the payment of money,
whether direct or indirect, absolute or contingent, due or to become due, now
existing or hereafter arising, and including all such amounts that Borrower or
its Subsidiaries are obligated to reimburse to Lender as a result of Lender
purchasing participations from, or executing indemnities or reimbursement
obligations to, a Bank Product Provider with respect to the Bank Products
provided by such Bank Product Provider to Borrower or its Subsidiaries.
"BANK PRODUCT PROVIDER" means Xxxxx Fargo or any of its Affiliates.
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"BANK PRODUCT RESERVE" means, as of any date of determination, the
lesser of (a) $5,000,000, and (b) the amount of reserves that Lender has
established (based upon the Bank Product Providers' reasonable determination of
the credit exposure in respect of then extant Bank Products) in respect of Bank
Products then provided or outstanding.
"BANKRUPTCY CODE" means title 11 of the United States Code, as in
effect from time to time.
"BASE LIBOR RATE" means the rate per annum, determined by Lender in
accordance with its customary procedures, and utilizing such electronic or other
quotation sources as it considers appropriate (rounded upwards, if necessary, to
the next 1/100%), to be the rate at which Dollar deposits (for delivery on the
first day of the requested Interest Period) are offered to major banks in the
London interbank market 2 Business Days prior to the commencement of the
requested Interest Period, for a term and in an amount comparable to the
Interest Period and the amount of the LIBOR Rate Loan requested (whether as an
initial LIBOR Rate Loan or as a continuation of an extant LIBOR Rate Loan or as
a conversion of a Base Rate Loan to a LIBOR Rate Loan) by Borrower in accordance
with this Agreement, which determination shall be conclusive in the absence of
manifest error.
"BASE RATE" means, the rate of interest announced, from time to time,
within Xxxxx Fargo at its principal office in San Francisco as its "prime rate",
with the understanding that the "prime rate" is one of Xxxxx Fargo's base rates
(not necessarily the lowest of such rates) and serves as the basis upon which
effective rates of interest are calculated for those loans making reference
thereto and is evidenced by the recording thereof after its announcement in such
internal publications as Xxxxx Fargo may designate.
"BASE RATE LOAN" means the portion of the Advances that bears interest
at a rate determined by reference to the Base Rate.
"BASE RATE MARGIN" means 1.75 percentage points.
"BENEFIT PLAN" means a "defined benefit plan" (as defined in SECTION
3(35) of ERISA) for which Borrower or any Subsidiary or ERISA Affiliate of
Borrower has been an "employer" (as defined in Section 3(5) of ERISA) within the
past six years.
"BOARD OF DIRECTORS" means the board of directors (or comparable
managers) of Borrower or any committee thereof duly authorized to act on behalf
of the board of directors (or comparable managers).
"BOOKS" means Borrower's and its Subsidiaries' now owned or hereafter
acquired books and records (including (1) all of their Records indicating,
summarizing, or evidencing their assets (including the Collateral) or
liabilities, (2) all of Borrower's and its Subsidiaries' Records relating to
their business operations or financial condition, and (3) all of their goods or
General Intangibles related to such books and records).
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"BORROWER" has the meaning set forth in the preamble to this
Agreement.
"BORROWER COLLATERAL" means all of Borrower's now owned or hereafter
acquired right, title, and interest in and to each of the following:
(a) all of its Accounts,
(b) all of its Books,
(c) all of its commercial tort claims,
(d) all of its Deposit Accounts,
(e) all of its Equipment,
(f) all of its General Intangibles,
(g) all of its Inventory,
(h) all of its Investment Property (including all of its
securities and Securities Accounts),
(i) all of its Negotiable Collateral,
(j) money or other assets of Borrower that now or hereafter come
into the possession, custody, or control of the Lender, and
(k) the proceeds and products, whether tangible or intangible,
of any of the foregoing, including proceeds of insurance covering any or all of
the foregoing, and any and all Accounts, Books, Deposit Accounts, Equipment,
General Intangibles, Inventory, Investment Property, Negotiable Collateral, Real
Property, money, or other tangible or intangible property resulting from the
sale, exchange, collection, or other disposition of any of the foregoing, or any
portion thereof or interest therein, and the proceeds thereof.
Anything contained in this Agreement to the contrary notwithstanding,
the terms "Borrower Collateral" and "Collateral" shall not include any Excluded
Assets.
"BORROWING" means a borrowing hereunder consisting of Advances.
"BORROWING BASE" means, as of any date of determination, the result
of:
(a) the lesser of
(i) 80% of Borrower's TTM EBITDA, as determined in accordance
with the financial statements most recently delivered by Borrower
under SECTION 6.3(a); and
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(ii) 25% of the Enterprise Value of Borrower, MINUS
(b) the sum of (i) the Bank Product Reserve, and (ii) the
aggregate amount of reserves, if any, established by Lender under SECTION
2.1(b).
"BORROWER'S HEADQUARTERS" means 0000 Xxx Xxxx Xxxx Xxxx, Xxx Xxxx
Xxxx, XX 00000.
"BUSINESS DAY" means any day that is not a Saturday, Sunday, or other
day on which banks are authorized or required to close in the state of New York,
except that, if a determination of a Business Day shall relate to a LIBOR Rate
Loan, the term "Business Day" also shall exclude any day on which banks are
closed for dealings in Dollar deposits in the London interbank market.
"CAPITAL EXPENDITURES" means, with respect to any Person for any
period, the aggregate of all expenditures by such Person and its Subsidiaries
during such period that are capital expenditures as determined in accordance
with GAAP, whether such expenditures are paid in cash or financed.
"CAPITAL LEASE" means a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP.
"CAPITALIZED LEASE OBLIGATION" means that portion of the obligations
under a Capital Lease that is required to be capitalized in accordance with
GAAP.
"CASH EQUIVALENTS" means (a) marketable direct obligations issued or
unconditionally guaranteed by the United States or issued by any agency thereof
and backed by the full faith and credit of the United States, in each case
maturing within 1 year from the date of acquisition thereof, (b) marketable
direct obligations issued or fully guaranteed by any state of the United States
or any political subdivision of any such state or any public instrumentality
thereof maturing within 1 year from the date of acquisition thereof and, at the
time of acquisition, having one of the two highest ratings obtainable from
either Standard & Poor's Rating Group ("S&P") or Xxxxx'x Investor Service, Inc.
("Moody's"), (c) commercial paper maturing no more than 270 days from the date
of creation thereof and, at the time of acquisition, having a rating of at least
A-1, from S&P or at least P-1 from Moody's, (d) certificates of deposit, time
deposits, overnight bank deposits or bankers' acceptances maturing within 1 year
from the date of acquisition thereof issued by any bank organized under the laws
of the United States, any state thereof or the District of Columbia or the
United States branch of a foreign bank having at the date of acquisition thereof
combined capital and surplus of not less than $250,000,000, (e) demand Deposit
Accounts maintained with any bank organized under the laws of the United States
or any state thereof so long as the amount maintained with any individual bank
is less than or equal to $100,000 and is insured by the Federal Deposit
Insurance Corporation, (f) repurchase obligations of any commercial bank
satisfying the requirements of clause (d) of this definition or
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recognized securities dealer having combined capital and surplus of not less
than $250,000,000, provided such repurchase obligations have a term of not more
than seven days and are securities that otherwise satisfy the criteria in clause
(a) or (d) above, (g) securities with maturities of six months or less from the
date of acquisition backed by standby letters of credit issued by any commercial
bank satisfying the requirements of clause (d) above, and (h) Investments in
money market funds substantially all of whose assets are invested in the types
of assets described in clauses (a) through (g) above.
"CASH MANAGEMENT ACCOUNT" has the meaning set forth in SECTION 2.7(a).
"CASH MANAGEMENT AGREEMENTS" means those certain cash management
agreements, in form and substance reasonably satisfactory to Lender, each of
which is among Borrower or one of its Subsidiaries, Lender, and one of the Cash
Management Banks.
"CASH MANAGEMENT BANK" has the meaning set forth in SECTION 2.7(a).
"CFC" means a controlled foreign corporation (as that term is defined
in the IRC).
"CHANGE OF CONTROL" means that (a) any "person" or "group" (within the
meaning of Sections 13(d) and 14(d) of the Exchange Act), other than Permitted
Holders, becomes the beneficial owner (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of 30%, or more, of the Stock of Borrower
having the right to vote for the election of members of the Board of Directors
and one or more Permitted Holders beneficially own, directly or indirectly, in
the aggregate a lesser percentage of such Stock and do not have the right or
ability by voting power, contract or otherwise, to elect or designate for
election a majority of the Board of Directors of the Borrower, (b) a majority of
the members of the Board of Directors do not constitute Continuing Directors,
(c) at any time prior to the occurrence of a Qualified IPO, Permitted Holders
cease to own, directly or indirectly, and control at least 51% of the
outstanding Stock or Borrower or Parent, and (d) except to the extent expressly
permitted hereby, Borrower ceases to own, directly or indirectly, and control
100% of the outstanding Stock of each of its Subsidiaries.
"CLOSING DATE" means the date of the making of the initial Advance (or
other extension of credit) hereunder or the date on which all of the conditions
precedent for the making of such Advance (or other extension of credit) are
satisfied.
"CLOSING DATE BUSINESS PLAN" means the set of Projections of Borrower
for the 4 year period following the Closing Date (on a year by year basis, and
for the 1 year period following the Closing Date, on a month by month basis), in
form and substance (including as to scope and underlying assumptions) reasonably
satisfactory to Lender.
"CODE" means the New York Uniform Commercial Code, as in effect from
time to time.
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"COLLATERAL" means all assets and interests in assets and proceeds
thereof now owned or hereafter acquired by Borrower or any Guarantor in or upon
which a Lien is granted under any of the Loan Documents.
"COLLATERAL ACCESS AGREEMENT" means a landlord waiver, bailee letter,
or acknowledgement agreement of any lessor, warehouseman, processor, consignee,
or other Person in possession of, having a Lien upon, or having rights or
interests in Borrower's or its Subsidiaries' Books, Equipment or Inventory, in
each case, in form and substance satisfactory to Lender.
"COLLECTIONS" means ALL cash, checks, notes, instruments, credit card
slips or receipts, and other items of payment (including insurance proceeds,
cash proceeds of asset sales, rental proceeds, and tax refunds).
"COMMERCIAL TORT CLAIM ASSIGNMENT" has the meaning set forth in
SECTION 4.4(b).
"COMMISSION" means the Securities and Exchange Commission.
"COMPLIANCE CERTIFICATE" means a certificate substantially in the form
of EXHIBIT C-1 delivered by the chief financial officer of Borrower to Lender.
"CONCENTRATION ACCOUNT" means the Deposit Account of Xxxxxx'x of
Chicago, Inc. identified on SCHEDULE C-1.
"CONSOLIDATED RESTAURANT PRE-OPENING COSTS" means "Start-up costs"
(such term used herein as defined in SOP 98-5 published by the American
Institute of Certified Public Accountants) related to the acquisition, opening
and organizing of new Restaurants, such costs including, without limitation, the
cost of feasibility studies, staff-training, and recruiting and travel costs for
employees engaged in such start-up activities up to a maximum of $600,000 per
Restaurant.
"CONTINUING DIRECTOR" means (a) any member of the Board of Directors
who was a director (or comparable manager) of Borrower on the Closing Date, and
(b) any individual who becomes a member of the Board of Directors after the
Closing Date if such individual was appointed or nominated for election to the
Board of Directors by a majority of the Continuing Directors, but excluding any
such individual originally proposed for election in opposition to the Board of
Directors in office at the Closing Date in an actual or threatened election
contest relating to the election of the directors (or comparable managers) of
Borrower and whose initial assumption of office resulted from such contest or
the settlement thereof.
"CONTROL AGREEMENT" means a control agreement, in form and substance
reasonably satisfactory to Lender, executed and delivered by Borrower or one of
its
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Subsidiaries, Lender, and the applicable securities intermediary with respect to
a Securities Account or bank with respect to a Deposit Account.
"CREDIT CARD AGREEMENTS" means those certain credit card receipts
agreements, each in form and substance reasonably satisfactory to Lender,
executed and delivered by Borrower or one of its Subsidiaries, Lender and the
applicable Credit Card Processor.
"CREDIT CARD PROCESSOR" means any Person (including an issuer of a
credit card) that acts as a credit card clearinghouse or remits payments due to
Borrower or a Guarantor with respect to credit card charges accepted by Borrower
or a Guarantor.
"DAILY BALANCE" means, as of any date of determination and with
respect to any Obligation, the amount of such Obligation owed at the end of such
day.
"DEFAULT" means an event, condition, or default that, with the giving
of notice, the passage of time, or both, would be an Event of Default.
"DEPOSIT ACCOUNT" means any deposit account (as that term is defined
in the Code).
"DESIGNATED ACCOUNT" means the Deposit Account of Borrower identified
on SCHEDULE D-1.
"DESIGNATED ACCOUNT BANK" has the meaning ascribed thereto on SCHEDULE
D-1.
"DOLLARS" or "$" means United States dollars.
"DOMESTIC SUBSIDIARY" means any Subsidiary of Borrower that is
organized under the laws of a jurisdiction located within the territorial limits
of the United States of America.
"EBITDA" means, with respect to any fiscal period, Borrower's and its
Subsidiaries' consolidated net earnings (or loss), excluding extraordinary gains
and losses, non-cash gains and losses and non-cash charges or credits associated
with the closing of a Restaurant, as determined in accordance with GAAP, minus
interest income, plus interest expense, income taxes, and depreciation and
amortization for such period, as determined in accordance with GAAP, plus
Consolidated Restaurant Pre-Opening Costs for such period, plus the Management
Fee for such period, minus Property Insurance Gains for such period, plus
Strategic Costs, plus Non-recurring Expenses for such period, less Non-recurring
Income for such period.
"ELIGIBLE TRANSFEREE" means (a) a commercial bank organized under the
laws of the United States, or any state thereof, and having total assets in
excess of $250,000,000,
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(b) a commercial bank organized under the laws of any other country which is a
member of the Organization for Economic Cooperation and Development or a
political subdivision of any such country and which has total assets in excess
of $250,000,000, provided that such bank is acting through a branch or agency
located in the United States, (c) a finance company, insurance company, or other
financial institution or fund that is engaged in making, purchasing, or
otherwise investing in commercial loans in the ordinary course of its business
and having (together with its Affiliates) total assets in excess of
$250,000,000, (d) any Affiliate (other than individuals) of a Lender, (e) so
long as no Event of Default has occurred and is continuing, any other Person
approved by Borrower (which approval of Borrower shall not be unreasonably
withheld, delayed, or conditioned).
"ENTERPRISE VALUE" means the value of Borrowers' and Guarantors'
businesses and assets, on a consolidated basis, agreed to be $168,000,000 as of
the Closing Date and thereafter, the appraised value as determined by Lender
provided that so long as no Default or Event of Default has occurred or is
continuing, such appraised value shall be determined no more frequently than
once per year and shall be determined by a third-party appraiser selected by
Lender from those listed on SCHEDULE E-2 (or such other appraiser as may be
acceptable to Lender and Borrower).
"ENVIRONMENTAL ACTIONS" means any written complaint, summons,
citation, notice, directive, order, claim, litigation, investigation, judicial
or administrative proceeding, judgment, letter, or other written communication
from any Governmental Authority, or any third party alleging Borrower or any
Domestic Subsidiary caused or otherwise is liable for or is a responsible party
in connection with any violations of Environmental Laws or releases of Hazardous
Materials from (a) any assets, properties, or businesses of Borrower or its
Subsidiaries, or (b) from or onto any facilities which received Hazardous
Materials generated by Borrower or its Domestic Subsidiaries.
"ENVIRONMENTAL LAW" means any applicable federal, state, provincial,
foreign or local statute, law, rule, regulation, ordinance, code, binding and
enforceable guideline, binding and enforceable written policy, or rule of common
law now or hereafter in effect and in each case as amended, including any
judicial or administrative order, consent decree or judgment, to the extent
binding on Borrower or its Domestic Subsidiaries, relating to the environment or
human health, including CERCLA; RCRA; the Federal Water Pollution Control Act,
33 USC Section 1251 ET SEQ; the Toxic Substances Control Act, 15 USC, Section
2601 ET SEQ; the Clean Air Act, 42 USC Section 7401 ET SEQ.; the Safe Drinking
Water Act, 42 USC. Section 3803 ET SEQ.; the Oil Pollution Act of 1990, 33 USC.
Section 2701 ET SEQ.; the Emergency Planning and the Community Right-to-Know Act
of 1986, 42 USC. Section 11001 ET SEQ.; the Hazardous Material Transportation
Act, 49 USC Section 1801 ET SEQ.; and the Occupational Safety and Health Act, 29
USC. Section651 ET SEQ. (to the extent it regulates occupational exposure to
Hazardous Materials); any state and local or foreign counterparts or
equivalents, in each case as amended from time to time.
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"ENVIRONMENTAL LIABILITIES AND COSTS" means all liabilities, monetary
obligations, Remedial Actions, losses, damages, punitive damages, costs and
expenses (including all reasonable fees, disbursements and expenses of counsel,
experts, or consultants, and costs of investigation and feasibility studies),
fines, penalties, sanctions, and interest incurred as a result of any claim or
demand by any Governmental Authority or any third party, and which relate to any
Environmental Action.
"ENVIRONMENTAL LIEN" means any asserted or perfected Lien in favor of
any Governmental Authority for Environmental Liabilities and Costs.
"EQUIPMENT" means equipment (as that term is defined in the Code) and
includes machinery, machine tools, motors, furniture, furnishings, fixtures,
vehicles, computer hardware, tools, parts, and goods (other than consumer goods,
farm products, or Inventory), wherever located, including all attachments,
accessories, accessions, replacements, substitutions, additions, and
improvements to any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute thereto.
"ERISA AFFILIATE" means (a) any Person subject to ERISA whose
employees are treated as employed by the same employer as the employees of
Borrower or its Subsidiaries under IRC Section 414(b), (b) any trade or business
subject to ERISA whose employees are treated as employed by the same employer as
the employees of Borrower or its Subsidiaries under IRC Section 414(c), (c)
solely for purposes of Section 302 of ERISA and Section 412 of the IRC, any
organization subject to ERISA that is a member of an affiliated service group of
which Borrower or any of its Subsidiaries is a member under IRC Section 414(m),
or (d) solely for purposes of Section 302 of ERISA and Section 412 of the IRC,
any Person subject to ERISA that is a party to an arrangement with Borrower or
any of its Subsidiaries and whose employees are aggregated with the employees of
Borrower or its Subsidiaries under IRC Section 414(o).
"EVENT OF DEFAULT" has the meaning set forth in SECTION 8.
"EXCESS AVAILABILITY" means, as of any date of determination, the
amount equal to Availability MINUS the aggregate amount, if any, of all trade
payables of Borrower and Guarantors aged in excess of historical levels with
respect thereto and all book overdrafts of Borrower and Guarantors in excess of
historical practices with respect thereto, in each case as determined by Lender
in its Permitted Discretion.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as in effect
from time to time.
"EXCLUDED ASSETS" means:
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(i) any leasehold interest of Borrower or any of its Subsidiaries in
real property,
(ii) contracts, leasehold interests, permits, licenses or charter
agreements (the "Contracts") of Borrower or any of its Domestic Subsidiaries to
the extent (and only to the extent) that the Contracts by their terms prohibit
the granting of a Lien thereon without consent and any required consent has not
been obtained, PROVIDED, that, the exclusion contained in this clause (ii) shall
not apply and shall in no way be construed to apply (x) to the extent that the
granting of a Lien in, to or on any of the Contracts is or would be effective
under Sections 9-406, 9-407, or 9-408 of the Code or other applicable law, (y)
so as to limit, impair, or otherwise affect Lender's Liens upon any rights or
interests of Borrower or any Subsidiary in or to monies due or to become due
under any of the Contracts (including any Accounts), or (z) to limit, impair, or
otherwise affect Lender's Liens upon any rights or interests of Borrower or any
Subsidiary in and to any proceeds from the sale, license, lease, or other
dispositions of any of the Contracts or any other asset;
(iii) Investment Property of Borrower constituting capital Stock of
Borrower's direct Subsidiaries that are CFCs, solely to the extent that such
Investment Property is in excess of 65% of the capital Stock of such CFC;
(iv) any intent-to-use trademark or service xxxx application contained
in the General Intangibles if granting a security interest therein is deemed to
invalidate, void, cancel or abandon such applications, provided that such
applications shall constitute Collateral at such time as the same is used in
commerce; and
(v) any fee interest of Borrower or any of its Subsidiaries in Real
Property to the extent that (a) such Real Property is subject to an existing
mortgage (other than any Mortgage entered into at any time in favor of Lender)
until the termination of such mortgage (or such Real Property is the subject of
a Permitted Sale and Leaseback) or (b) the Fair Market Value of such fee
interest does not exceed $1,000,000; PROVIDED, HOWEVER, that the Fair Market
Value of all fee interests excluded pursuant to this CLAUSE (v)(b) shall not
exceed $2,500,000 in the aggregate at any one time.
"EXISTING LENDER" means Fleet National Bank, as agent for itself and
the other lenders party to that certain Second Amended and Restated Revolving
Credit and Term Loan Agreement, dated June 19, 1995, between Borrower, Fleet
National Bank and the other parties thereto.
"FAIR MARKET VALUE" means, with respect to any asset or property, the
price which could be negotiated in an arm's length, free market transaction, for
cash, between a willing seller and a willing and able buyer, neither of whom is
under undue pressure or compulsion to complete the transaction. Fair Market
Value shall be determined by the Board of Directors of Borrower acting
reasonably and in good faith and if such value exceeds
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$4,000,000, shall be evidenced by a Board Resolution of the Board of Directors
of Borrower, delivered to the Lender.
"FEE LETTER" means that certain fee letter, dated as of even date
herewith, between Borrower and Lender, in form and substance reasonably
satisfactory to Lender.
"FEIN" means Federal Employer Identification Number.
"FOREIGN SUBSIDIARY" means any Subsidiary that is not a Domestic
Subsidiary.
"FUNDING DATE" means the date on which a Borrowing occurs.
"FUNDING LOSSES" has the meaning set forth in SECTION 2.13(b)(ii).
"GAAP" means generally accepted accounting principles as in effect
from time to time in the United States, consistently applied.
"GENERAL INTANGIBLES" means general intangibles (as that term is
defined in the Code), including payment intangibles, contract rights, rights to
payment, rights arising under common law, statutes, or regulations, choses or
things in action, goodwill, patents, trade names, trade secrets, trademarks,
servicemarks, copyrights, blueprints, drawings, purchase orders, customer lists,
monies due or recoverable from pension funds, route lists, rights to payment and
other rights under any royalty or licensing agreements, infringement claims,
computer programs, information contained on computer disks or tapes, software,
literature, reports, catalogs, insurance premium rebates, tax refunds, and tax
refund claims, and any and all supporting obligations in respect thereof, and
any other personal property other than Accounts, Deposit Accounts, goods,
Investment Property, and Negotiable Collateral.
"GOVERNING DOCUMENTS" means, with respect to any Person, the
certificate or articles of incorporation, by-laws, or other organizational
documents of such Person.
"GOVERNMENTAL AUTHORITY" means any federal, state, local, or other
governmental or administrative body, instrumentality, department, or agency or
any court, tribunal, administrative hearing body, arbitration panel, commission,
or other similar dispute-resolving panel or body.
"GUARANTOR" means (a) each Domestic Subsidiary of Borrower (other than
Inactive Subsidiaries), and (b) each other Person that guarantees the
Obligations in favor of Lender.
"GUARANTOR SECURITY AGREEMENT" means one or more security agreements
executed and delivered by each Guarantor in favor of Lender and the Bank Product
Providers, in each case, in form and substance reasonably acceptable to Lender.
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"GUARANTY" means that certain general continuing guaranty executed and
delivered by each Guarantor in favor of Lender and the Bank Product Providers,
in form and substance reasonably acceptable to Lender.
"HAZARDOUS MATERIALS" means (a) substances that are defined or listed
in, or otherwise classified pursuant to, any applicable Environmental Laws as
"hazardous substances," "hazardous materials," "hazardous wastes," "toxic
substances," or any other formulation intended to define, list, or classify
substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or "EP
toxicity", (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in any form or electrical
equipment that contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of 50 parts per million.
"HEDGE AGREEMENT" means any and all agreements or documents now
existing or hereafter entered into by Borrower or its Subsidiaries that provide
for an interest rate, credit, commodity or equity swap, cap, floor, collar,
forward foreign exchange transaction, currency swap, cross currency rate swap,
currency option, or any combination of, or option with respect to, these or
similar transactions, for the purpose of hedging Borrower's or its Subsidiaries'
exposure to fluctuations in interest or exchange rates, loan, credit exchange,
security or currency valuations or commodity prices.
"INACTIVE SUBSIDIARY" means those Subsidiaries listed on SCHEDULE I-1
hereto.
"INDEBTEDNESS" means (a) all obligations for borrowed money, (b) all
obligations evidenced by bonds, debentures, notes, or other similar instruments
and all reimbursement or other obligations in respect of letters of credit,
bankers acceptances, or other financial products, (c) all obligations as a
lessee under Capital Leases, (d) all net obligations or liabilities of others
secured by a Lien on any asset of a Person or its Subsidiaries, irrespective of
whether such obligation or liability is assumed, (e) all obligations to pay the
deferred purchase price of assets (other than trade payables incurred in the
ordinary course of business and repayable in accordance with customary trade
practices), (f) all obligations owing under Hedge Agreements (which amount shall
be calculated based on the amount that would be payable by such Person if the
Hedge Agreement were terminated on the date of determination), and (g) any
obligation guaranteeing or intended to guarantee (whether directly or indirectly
guaranteed, endorsed, co-made, discounted, or sold with recourse) any obligation
of any other Person that constitutes Indebtedness under any of clauses (a)
through (f) above.
"INDEMNIFIED LIABILITIES" has the meaning set forth in SECTION 11.3.
"INDEMNIFIED PERSON" has the meaning set forth in SECTION 11.3.
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"INDENTURE" means the Indenture, dated as of July 7, 2003, by and
among the Borrower, the subsidiaries of the Borrower party thereto and The Bank
of New York, as Trustee and the Collateral Agent (as defined therein).
"INDENTURE DOCUMENTS" means the Indenture, the Notes and the
Collateral Agreements (each as defined in the Indenture), and all agreements and
other documents executed or delivered by any of the Borrower and its
Subsidiaries in connection therewith.
"INSOLVENCY PROCEEDING" means any proceeding commenced by or against
any Person under any provision of the Bankruptcy Code or under any other state
or federal bankruptcy or insolvency law, assignments for the benefit of
creditors, formal or informal moratoria, compositions, extensions generally with
creditors, or proceedings seeking reorganization, arrangement, or other similar
relief.
"INTELLECTUAL PROPERTY" means all patents, patent applications,
trademarks, trademark applications, tradenames, tradedress, copyrights,
copyright registrations, technology, know-how and processes used in or necessary
for the conduct of the business of any Person as currently conducted that are
material to the condition (financial or otherwise), business, or operations of
such Person.
"INTERCOMPANY SUBORDINATION AGREEMENT" means a subordination agreement
executed and delivered by Borrower and each of its Subsidiaries and Lender, the
form and substance of which is reasonably satisfactory to Lender.
"INTERCREDITOR AGREEMENT" means that certain Intercreditor and Lien
Subordination Agreement by and among Lender, Trustee, Borrower, and each
Guarantor, which is in form and substance reasonably satisfactory to Lender.
"INTEREST EXPENSE" means, for any period, the aggregate of the
interest expense of Borrower and its Subsidiaries for such period, determined on
a consolidated basis in accordance with GAAP.
"INTEREST PERIOD" means, with respect to each LIBOR Rate Loan, a
period commencing on the date of the making of such LIBOR Rate Loan (or the
continuation of a LIBOR Rate Loan or the conversion of a Base Rate Loan to a
LIBOR Rate Loan) and ending 1, 2, 3 or 6 months thereafter; PROVIDED, HOWEVER,
that (a) if any Interest Period would end on a day that is not a Business Day,
such Interest Period shall be extended (subject to clauses (c)-(e) below) to the
next succeeding Business Day, (b) interest shall accrue at the applicable rate
based upon the LIBOR Rate from and including the first day of each Interest
Period to, but excluding, the day on which any Interest Period expires, (c) any
Interest Period that would end on a day that is not a Business Day shall be
extended to the next succeeding Business Day unless such Business Day falls in
another calendar month, in which case such Interest Period shall end on the next
preceding Business Day, (d) with respect to an Interest Period that begins on
the last Business Day of a calendar month (or on a day for which there
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is no numerically corresponding day in the calendar month at the end of such
Interest Period), the Interest Period shall end on the last Business Day of the
calendar month that is 1, 2, 3 or 6 months after the date on which the Interest
Period began, as applicable, and (e) Borrower may not elect an Interest Period
which will end after the Maturity Date.
"INVENTORY" means inventory (as that term is defined in the Code).
"INVESTMENT" means, with respect to any Person, any investment by such
Person in any other Person (including Affiliates) in the form of loans,
guarantees, advances, or capital contributions (excluding (a) commission,
travel, moving, and similar advances to officers and employees of such Person
made in the ordinary course of business, and (b) BONA FIDE Accounts arising in
the ordinary course of business consistent with past practices), purchases or
other acquisitions of Indebtedness, Stock, or all or substantially all of the
assets of such other Person (or of any division or business line of such other
Person), and any other items that are or would be classified as investments on a
balance sheet prepared in accordance with GAAP.
"INVESTMENT PROPERTY" means investment property (as that term is
defined in the Code), and any and all supporting obligations in respect thereof.
"IP ENTITIES" means Borrower and those of its Subsidiaries that own
any interest in Intellectual Property of Borrower or its Subsidiaries.
"IRC" means the Internal Revenue Code of 1986, as in effect from time
to time.
"ISSUING LENDER" means WFF or any other Person that, at the request of
Borrower and with the consent of Lender, exercised in Lender's sole discretion,
agrees to become an Issuing Lender for the purpose of issuing L/Cs or L/C
Undertakings pursuant to SECTION 2.12.
"L/C" has the meaning set forth in SECTION 2.12(a).
"L/C DISBURSEMENT" means a payment made by Lender pursuant to a Letter
of Credit.
"L/C UNDERTAKING" has the meaning set forth in SECTION 2.12(a).
"LENDER" has the meaning set forth in the preamble to this Agreement.
"LENDER EXPENSES" means all (a) costs or expenses (including taxes,
and insurance premiums) required to be paid by Borrower or its Subsidiaries
under any of the Loan Documents that are paid, advanced, or incurred by Lender,
(b) fees or charges paid or incurred by Lender in connection with Lender's
transactions with Borrower or its Subsidiaries under the Loan Documents,
including, fees or charges for photocopying,
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notarization, couriers and messengers, telecommunication, public record searches
(including tax lien, litigation, and UCC searches and including searches with
the patent and trademark office, the copyright office, or the department of
motor vehicles), filing, recording, publication, appraisal (including periodic
collateral appraisals or business valuations to the extent of the fees and
charges (and up to the amount of any limitation) contained in this Agreement),
real estate surveys, real estate title policies and endorsements, and
environmental audits, (c)out-of-pocket costs and expenses incurred by Lender in
the disbursement of funds to Borrower (by wire transfer or otherwise), (d)
out-of-pocket charges paid or incurred by Lender resulting from the dishonor of
checks payable by or to any Loan Party, (e) reasonable out-of-pocket costs and
expenses paid or incurred by Lender to correct any default or enforce any
provision of the Loan Documents, or in gaining possession of, maintaining,
handling, preserving, storing, shipping, selling, preparing for sale, or
advertising to sell the Collateral, or any portion thereof, irrespective of
whether a sale is consummated, (f) audit fees and expenses of Lender related to
audit examinations of the Books to the extent of the fees and charges (and up to
the amount of any limitation) contained in this Agreement, (g) reasonable
out-of-pocket costs and expenses of third party claims or any other suit paid or
incurred by Lender in enforcing or defending the Loan Documents or in connection
with the transactions contemplated by the Loan Documents or Lender's
relationship with Borrower or any of its Subsidiaries, to the extent permitted
under the Loan Documents (h) Lender's reasonable out-of-pocket costs and
expenses (including attorneys fees) incurred in advising, structuring, drafting,
reviewing, administering, syndicating, or amending the Loan Documents, and (i)
Lender's reasonable costs and expenses (including attorneys, accountants,
consultants, and other advisors fees and expenses) incurred in terminating,
enforcing (including attorneys, accountants, consultants, and other advisors
fees and expenses incurred in connection with a "workout," a "restructuring," or
an Insolvency Proceeding concerning Borrower or any of its Subsidiaries or in
exercising rights or remedies under the Loan Documents), or defending the Loan
Documents, irrespective of whether suit is brought, or in taking any Remedial
Action concerning the Collateral, PROVIDED, HOWEVER, that in no event shall
"Lender Expenses" include any portion of costs, fees or expenses of the Lender
resulting solely from the willful misconduct, bad faith or gross negligence of
Lender or any Lender-Related Person as finally determined by a court of
competent jurisdiction.
"LENDER-RELATED PERSON" means Lender, together with its Affiliates,
officers, directors, employees, attorneys, and agents.
"LENDER'S ACCOUNT" means the account identified in SCHEDULE L-1.
"LENDER'S LIENS" means the Liens granted by Borrower and each
Guarantor to Lender under this Agreement or the other Loan Documents.
"LETTER OF CREDIT" means an L/C or an L/C Undertaking, as the context
requires.
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"LETTER OF CREDIT USAGE" means, as of any date of determination, the
aggregate undrawn amount of all outstanding Letters of Credit.
"LIBOR DEADLINE" has the meaning set forth in SECTION 2.13(b)(i).
"LIBOR NOTICE" means a written notice in the form of EXHIBIT L-1.
"LIBOR RATE" means, for each Interest Period for each LIBOR Rate Loan,
the rate per annum determined by Lender (rounded upwards, if necessary, to the
next 1/100%) by DIVIDING (a) the Base LIBOR Rate for such Interest Period, BY
(b) 100% MINUS the Reserve Percentage. The LIBOR Rate shall be adjusted on and
as of the effective day of any change in the Reserve Percentage.
"LIBOR RATE LOAN" means each portion of an Advance that bears interest
at a rate determined by reference to the LIBOR Rate.
"LIBOR RATE MARGIN" means the Base Rate PLUS the Base Rate Margin
MINUS the LIBOR Rate.
"LIEN" means any interest in an asset securing an obligation owed to,
or a claim by, any Person other than the owner of the asset, irrespective of
whether (a) such interest is based on the common law, statute, or contract, (b)
such interest is recorded or perfected, and (c) such interest is contingent upon
the occurrence of some future event or events or the existence of some future
circumstance or circumstances. Without limiting the generality of the foregoing,
the term "Lien" includes the lien or security interest arising from a mortgage,
deed of trust, encumbrance, pledge, hypothecation, collateral assignment,
assignment of any Account, deposit arrangement, security agreement, conditional
sale or trust receipt, or from a lease, consignment, or bailment for security
purposes and also includes reservations, exceptions, encroachments, easements,
rights-of-way, covenants, conditions, restrictions, leases, and other title
exceptions and encumbrances affecting Real Property.
"LOAN ACCOUNT" has the meaning set forth in SECTION 2.10.
"LOAN DOCUMENTS" means this Agreement, the Bank Product Agreements,
the Control Agreements, the Cash Management Agreements, the Credit Card
Agreements, the Fee Letter, the Guarantor Security Agreement, the Guaranty, the
Intercompany Subordination Agreement, the Mortgages, the Officers' Certificate,
the Stock Pledge Agreement, the Trademark Security Agreement, any note or notes
executed by Borrower in connection with this Agreement and payable to Lender,
and any other agreement entered into, now or in the future, by Borrower and
Lender in connection with this Agreement.
"MANAGEMENT AGREEMENT" means the Management Agreement, dated as of
July 25, 2002, by and between Parent and Xxxxxx Xxxxxx, Inc., as the same may be
amended
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from time to time; PROVIDED, HOWEVER, that no such amendment may (i) modify the
subordination provisions thereof, or (ii) increase the fees payable thereunder
to an amount exceeding $3.5 million in any year plus reasonable out-of-pocket
expenses incurred in connection with the performance of any of the duties
thereunder.
"MATERIAL ADVERSE CHANGE" means (a) a material adverse change in the
business, operations, results of operations, assets, liabilities or financial
condition of Borrower and its Subsidiaries, taken as a whole, (b) a material
impairment of Borrower's and its Subsidiaries' ability to perform their
obligations under the Loan Documents to which they are parties or of Lender's
ability to enforce the Obligations or realize upon the Collateral, or (c) a
material impairment of the enforceability or priority of the Lender's Liens with
respect to the Collateral as a result of an action or failure to act on the part
of Borrower or its Subsidiaries.
"MATURITY DATE" has the meaning set forth in SECTION 3.4.
"MAXIMUM REVOLVER AMOUNT" means (a) until such time as Borrower shall
have satisfied the requirements of SECTIONS 3.2(a), (b), (c), and (h), $750,000,
and (b) at all times thereafter, $15,000,000.
"MORTGAGES" means, individually and collectively, one or more
mortgages, deeds of trust, or deeds to secure debt, executed and delivered by
Borrower or its Subsidiaries in favor of Lender, in form and substance
reasonably satisfactory to Lender, that encumber the Real Property Collateral
and the related improvements thereto.
"NEGOTIABLE COLLATERAL" means letters of credit, letter of credit
rights, instruments, promissory notes, drafts, documents, and chattel paper
(including electronic chattel paper and tangible chattel paper), and any and all
supporting obligations in respect thereof.
"NET CASH PROCEEDS" means, with respect to any Permitted Disposition,
the amount of Collections received (directly or indirectly) from time to time
(whether as initial consideration or through the payment or disposition of
deferred consideration) by Borrower or any Guarantor after deduction of only the
following: (a) the amount of any Indebtedness secured by any Permitted Lien
which in either case is not assumed by the purchaser in such Permitted
Disposition and which is required to be paid and is repaid in connection with
such Permitted Disposition, other than the Obligations; (b) reasonable costs and
expenses incurred by Borrower or any Guarantor in connection with such Permitted
Disposition; or (c) transfer and documentary taxes paid to any taxing
authorities by Borrower or any Guarantor; and (d) the amount of net income taxes
payable in connection with such Permitted Disposition (calculated with reference
to tax credits, deductions and tax sharing arrangements, in each case only to
the extent that all such amounts are actually paid to a Person that is not an
Affiliate of the Borrower and is otherwise properly attributable to such
Permitted Disposition.
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"NON-RECURRING EXPENSES" means, expenses identified by Borrower to be
one-time charges and for which Lender, in its Permitted Discretion, has agreed
with Borrower as to the item's one-time nature.
"NON-RECURRING INCOME" means, income identified by Borrower to be
one-time income and for which Lender, in its Permitted Discretion, has agreed
with Borrower as to the item's one-time nature.
"NOTE" and "NOTES" shall have the meanings ascribed thereto in the
Indenture.
"OBLIGATIONS" means (a) all loans, Advances, debts, principal,
interest (including any interest that, but for the commencement of an Insolvency
Proceeding, would have accrued), contingent reimbursement obligations with
respect to outstanding Letters of Credit, premiums, liabilities (including all
amounts charged to the Loan Account pursuant hereto), obligations (including
indemnification obligations), fees (including the fees provided for in the Fee
Letter), charges, costs, Lender Expenses (including any fees or expenses that,
but for the commencement of an Insolvency Proceeding, would have accrued),
guaranties, covenants, and duties of any kind and description owing by Borrower
to Lender pursuant to or evidenced by the Loan Documents and irrespective of
whether for the payment of money, whether direct or indirect, absolute or
contingent, due or to become due, now existing or hereafter arising, and (b) all
Bank Product Obligations. Any reference in this Agreement or in the Loan
Documents to the Obligations shall include all extensions, modifications,
renewals or alterations thereof, both prior and subsequent to any Insolvency
Proceeding.
"OBLIGORS" means Borrower and the Guarantors, and "OBLIGOR" means any
one of them.
"OFFICERS' CERTIFICATE" means the representations and warranties of
officers form submitted by Lender to Borrower, together with Borrower's
completed responses to the inquiries set forth therein, the form and substance
of such responses to be reasonably satisfactory to Lender.
"OVERADVANCE" has the meaning set forth in SECTION 2.5.
"PARENT" means Mortons Holdings, LLC.
"PARTICIPANT" has the meaning set forth in SECTION 14.1(d).
"PAY-OFF LETTER" means a letter, in form and substance reasonably
satisfactory to Lender, from Existing Lender to Lender respecting the amount
necessary to repay in full all of the obligations of Borrower and its
Subsidiaries owing to Existing Lender and obtain a release of all of the Liens
existing in favor of Existing Lender in and to the assets of Borrower and its
Subsidiaries.
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"PERMITTED ACQUIRED INDEBTEDNESS" means, with respect to Borrower or
any of its Subsidiaries, Indebtedness of any other Person whose assets or Stock
are acquired by Borrower or any of its Subsidiaries in a Permitted Acquisition,
provided that such Indebtedness was existing prior to the date of such Permitted
Acquisition and was not incurred in connection with, or in contemplation of,
such Permitted Acquisition.
"PERMITTED ACQUISITION(S)" means any acquisition by Borrower or any of
its Domestic Subsidiaries of assets or capital Stock of a Person that after such
acquisition would be a Domestic Subsidiary, PROVIDED that each of the following
conditions is satisfied:
(a) such assets or capital Stock are related to the business of owning
and operating Restaurants;
(b) Borrower delivers to Lender written confirmation, supported by
reasonably detailed calculations, that on a PRO FORMA basis, created by adding
the historical combined financial statements of Borrower and its Subsidiaries
(including the combined financial statements of any other Person or assets that
were the subject of a prior Permitted Acquisition during the relevant period) to
the historical financial statements of the Person or assets to be acquired
(adjusted to eliminate expense items that would not have been incurred and
include income items that would have been recognized, in each case, if the
combination had been accomplished at the beginning of the relevant period; such
eliminations and inclusions to be mutually agreed upon by Borrower and Lender),
Borrower and its Subsidiaries would have been in compliance with their
obligations under this Agreement, including without limitation, the financial
covenants specified in SECTION 7.12 hereof for the 12 months immediately prior
to the proposed date of consummations of the proposed acquisition and
demonstrating that there is no Default or Event of Default after giving effect
to such acquisition;
(c) no Default or Event of Default in fact exists prior to or
immediately after giving effect to such acquisition;
(d) the Lender is granted a valid first priority perfected security
interest in the assets so acquired other than Excluded Assets (subject to
Permitted Liens), and, in the case of an acquisition of capital Stock, in the
assets of each entity formed or acquired and such entity becomes a Guarantor
pursuant to the Loan Documents (and grants Lender a first priority Lien, subject
to any Permitted Liens, in all of its assets other than Excluded Assets) and
Borrower or the relevant Guarantor shall have executed and delivered or
authorized, as applicable, any and all security agreements, financing
statements, fixture filings, and other documentation reasonably requested by
Lender in order to include the newly acquired assets (other than Excluded
Assets)within the Collateral;
(e) the terms of such acquisition are customary market terms,
negotiated on an arm's length basis and, to the extent the seller of such assets
or Stock is an Affiliate of Borrower, any of its Subsidiaries, or any Permitted
Holder, Lender shall have received a
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Board Resolution of the Board of Directors of Borrower certifying compliance
with the requirements set forth in this clause (e); and
(f) in any transaction pursuant to which the capital Stock of any
Person is acquired, such Person shall become a Domestic Subsidiary of the
Borrower or its applicable Domestic Subsidiary.
"PERMITTED DISCRETION" means a determination made in the exercise of
reasonable (from the perspective of a secured asset-based lender) business
judgment.
"PERMITTED DISPOSITIONS" means (a) sales, replacement, abandonment or
other dispositions of Equipment that is substantially worn, damaged, or obsolete
in the ordinary course of business, (b) sales of Inventory to buyers in the
ordinary course of business, (c) the use or transfer of money or Cash
Equivalents in a manner that is not prohibited by the terms of this Agreement or
the other Loan Documents, (d) Permitted Sale and Leasebacks, (e) the granting of
a Permitted Lien; (f) the dissolution of any Inactive Subsidiary, the closure of
any Unprofitable Restaurant, or the closure of up to 5 other Restaurants in the
ordinary course of business, and in each case, dissolution of any Guarantor
whose sole asset was the Restaurant that was closed pursuant to this clause (f);
(g) the sale or discount, in each case without recourse, of accounts receivable
arising in the ordinary course of business, but only in connection with the
compromise or collection thereof; (h) the good faith surrender or waiver of
contract rights or the settlement, release or surrender of claims of any kind;
(i) so long as no Default or Event of Default has occurred and is continuing or
would result therefrom, the transfer of assets (other than Intellectual Property
of Borrower or any IP Entity) from any Guarantor to Borrower or another
Guarantor or from Borrower to any Guarantor; (j) (i) any loss, damage or
destruction of property or (ii) any condemnation, seizure or taking, by exercise
of the power of eminent domain or otherwise, or confiscation or requisition of
use of property; (k) the leasing or subleasing of property in the ordinary
course of business; (l) so long as no Default or Event of Default has occurred
and is continuing or would result therefrom, the licensing of Intellectual
Property owned by Borrower or any IP Entity that is a Guarantor in connection
with the manufacture, distribution or sale of consumer products; PROVIDED,
HOWEVER, that after giving effect to any such license, Borrower and the
Guarantors must retain sufficient right, title and interest in and to such
Intellectual Property as to enable them to continue to conduct their businesses
in the ordinary course, (m) so long as no Default or Event of Default has
occurred and is continuing or would result therefrom, the licensing outside the
United States and Canada of Intellectual Property owned by Borrower or any IP
Entity that is a Guarantor; PROVIDED, HOWEVER, that after giving effect to any
such license, Borrower and the Guarantors must retain sufficient right, title
and interest in and to such Intellectual Property as to enable them to continue
to conduct their businesses in the ordinary course, and (n) so long as no
Default or Event of Default has occurred and is continuing or would result
therefrom, dispositions of assets (other than any Intellectual Property) not
otherwise permitted in clauses (a) through (m) so long as the Fair Market Value
of the assets so disposed would not exceed $1,000,000 in the aggregate.
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"PERMITTED HOLDERS" means (i) Xxxxxx Xxxxxx Partners III, L.P. or any
Affiliate or limited partner thereof or any fund or account controlled or
managed by or under common control with Xxxxxx Xxxxxx Partners III, L.P. or any
Affiliate or limited partner thereof, and (ii) Xxxxxx Xxxxxx, Inc. and
employees, management and directors of, and pooled investment vehicles managed
by, any of the foregoing, their limited partners and their respective
Affiliates.
"PERMITTED INVESTMENTS" means (a) Investments in cash and Cash
Equivalents, (b) Investments in negotiable instruments for collection, (c)
advances made in connection with purchases of goods or services in the ordinary
course of business, (d) Investments received in settlement of amounts due to
Borrower or any of its Subsidiaries effected in the ordinary course of business
or owing to Borrower or any of its Subsidiaries as a result of Insolvency
Proceedings involving an Account Debtor or upon the foreclosure or enforcement
of any Lien in favor of Borrower or its Subsidiaries; (e) so long as no Default
or Event of Default has occurred and is continuing or would result therefrom,
Investments by Borrower or any Guarantor in a newly created Subsidiary that is
or immediately after such Investment will be a Guarantor or any Permitted
Acquisition; (f) Investments in the form of loans or advances among the Borrower
and the Guarantors; (g) so long as no Default or Event of Default has occurred
and is continuing or would result therefrom, Investments by any Foreign
Subsidiary in any other Foreign Subsidiary of the Borrower; (h) so long as no
Default or Event of Default has occurred and is continuing or would result
therefrom, Investments in any Foreign Subsidiary of the Borrower by the
Borrower, any Guarantor, or Inactive Subsidiary but only so long as (i) the
aggregate amount of such Investments together with the aggregate amount of
Permitted Foreign Debt at any time outstanding does not exceed $5,000,000 and
(ii) after giving effect to each such Investment, Borrower shall have Excess
Availability of not less than $3,000,000; (i) Hedge Agreements entered into in
the ordinary course of Borrower's or Guarantors' businesses and otherwise
permitted under this Agreement; (j) Investments consisting of consideration
received by Borrower or any Guarantor as a result of a Permitted Disposition;
(k) Investments represented by guarantees that are otherwise permitted under
this Agreement; and (l) Investments existing on the Closing Date and disclosed
in SCHEDULE P-3 hereto.
"PERMITTED LIENS" means (a) Liens held by Lender, (b) Liens for unpaid
taxes that either (i) are not yet delinquent, or (ii) do not constitute an Event
of Default hereunder and are the subject of Permitted Protests, (c) Liens set
forth on SCHEDULE P-1, (d) the interests of lessors under operating leases, (e)
purchase money Liens or the interests of lessors under Capital Leases to the
extent that such Liens or interests secure Permitted Purchase Money Indebtedness
and so long as such Lien attaches only to the asset purchased or acquired and
the proceeds thereof, (f) Liens arising by operation of law in favor of
warehousemen, landlords, carriers, mechanics, materialmen, laborers, or
suppliers, incurred in the ordinary course of business and not in connection
with the borrowing of money, and which Liens either (i) are for sums not yet
delinquent, or (ii) are the subject of Permitted Protests, (g) Liens arising
from deposits made in connection with obtaining worker's compensation or
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other unemployment insurance, (h) Liens or deposits to secure performance of
bids, tenders, or leases incurred in the ordinary course of business and not in
connection with the borrowing of money, (i) Liens granted as security for surety
or appeal bonds in connection with obtaining such bonds in the ordinary course
of business, (j) Liens resulting from any judgment or award that is not an Event
of Default hereunder, (k) with respect to any Real Property, easements, rights
of way, zoning restrictions and other minor defects or irregularities in title
that do not materially interfere with or impair the use or operation thereof,
(l) Liens encumbering deposits made to secure obligations arising from
statutory, regulatory, contractual, or warranty requirements of Borrower or any
of its Subsidiaries, including rights of offset, (m) Liens securing Hedge
Agreements relating to Indebtedness otherwise permitted under the Indenture, (n)
Liens securing Permitted Acquired Indebtedness, PROVIDED that: (i) the Liens
securing such Permitted Acquired Indebtedness at the time of and prior to the
incurrence of such Permitted Acquired Indebtedness by Borrower or a Subsidiary
of Borrower and were not granted in connection with, or in anticipation of, the
incurrence of such Permitted Acquired Indebtedness by Borrower or a Subsidiary
of Borrower; and (ii) such Liens do not extend to or cover any property or
assets of Borrower or of any of its Subsidiaries other than the property or
assets that secured the Permitted Acquired Indebtedness prior to the time such
Indebtedness became Permitted Acquired Indebtedness of Borrower or a Subsidiary
of Borrower and are no more favorable to the lienholders thereof than those
securing the Permitted Acquired Indebtedness prior to the incurrence of such
Permitted Acquired Indebtedness by Borrower or a Subsidiary of Borrower, (o)
Liens securing the Indenture and the Indenture Documents, (p) Liens securing
Permitted Indebtedness of Foreign Subsidiaries of Borrower, (q) leases,
subleases, licenses and sublicenses granted to others that do not materially
interfere with the ordinary course of business of Borrower and its Subsidiaries,
(r) banker's Liens, rights of setoff and similar Liens with respect to cash and
Cash Equivalents on deposit in one or more bank accounts in the ordinary course
of business PROVIDED that to the extent such bank accounts are subject to
Control Agreements or Cash Management Agreements, such Liens and rights of
setoff are permitted thereunder, (s) Liens securing obligations with respect to
operating leases and guarantees thereof, provided that such Liens do not extend
to or cover any property of Borrower or any of its Subsidiaries other than the
property subject to such leases and any property or rights (including rights
under subleases) relating to such leased property or equity interest in any such
lease, (t) deposits made in the ordinary course of business to secure liability
to insurance carriers, (u) rights of a licensor of intellectual property in and
to such property, (v) Liens arising out of conditional sale, title retention,
consignment or similar arrangements for the sale of goods entered into by
Borrower or any of its Subsidiaries in the ordinary course of business, (w)
Liens incurred in the ordinary course of business of Borrower or any Subsidiary
of Borrower with respect to Permitted Indebtedness that do not exceed $1.0
million at any one time outstanding and that (i) are not incurred in connection
with the borrowing of money (other than trade credit in the ordinary course of
business) and (ii) do not in the aggregate materially detract from the value of
the property subject thereto, and (x) Liens securing Refinancing Indebtedness
which is incurred to refinance any Indebtedness which has been secured by a Lien
that is a Permitted Lien under clause (a)
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through (w) of this definition, PROVIDED, HOWEVER, that if there is any
Refinancing Indebtedness in respect of the Indebtedness evidenced by the Notes
(or any Refinancing Indebtedness in respect thereof), any Lien permitted under
this clause (x) shall only be permitted if such Lien is subordinated upon
substantially the same terms and conditions as the Intercreditor Agreement.
"PERMITTED PROTEST" means the right of Borrower or any of its
Subsidiaries to protest any Lien (other than any Lien that secures the
Obligations), taxes (other than payroll taxes or taxes that are the subject of a
United States federal tax lien), or rental payment, provided that (a) a reserve
with respect to such obligation is established on the Books in such amount as is
required under GAAP, (b) any such protest is instituted promptly and prosecuted
diligently by Borrower or its Subsidiary, as applicable, in good faith, and (c)
Lender is satisfied that, while any such protest is pending, there will be no
impairment of the enforceability, validity, or priority of any of the Lender's
Liens.
"PERMITTED PURCHASE MONEY INDEBTEDNESS" means, as of any date of
determination, Purchase Money Indebtedness incurred after the Closing Date in an
aggregate principal amount outstanding at any one time not in excess of $7.5
million.
"PERMITTED SALE AND LEASEBACK" means a sale and leaseback transaction
that is in respect of one or more of the parcels of real property listed on
SCHEDULE P-2, so long as (a) no Default or Event of Default under SECTION 8.1,
SECTION 8.4, or SECTION 8.5 shall have occurred and be continuing; and (b) the
Borrower (or Guarantor) receives Net Cash Proceeds in an amount equal to or
greater than 75% of the Fair Market Value of the property upon the closing of
the sale and leaseback transaction.
"PERSON" means natural persons, corporations, limited liability
companies, limited partnerships, general partnerships, limited liability
partnerships, joint ventures, trusts, land trusts, business trusts, or other
organizations, irrespective of whether they are legal entities, and governments
and agencies and political subdivisions thereof.
"PROJECTIONS" means Borrower's forecasted (a) balance sheets, (b)
profit and loss statements, and (c) cash flow statements, all prepared on a
basis consistent with Borrower's historical financial statements, except to the
extent necessary to take into account changes in GAAP, together with appropriate
supporting details and a statement of underlying assumptions.
"PROPERTY INSURANCE GAIN" means proceeds of business interruption
insurance received by Borrower or any of its Subsidiaries as compensation for
losses incurred by Xxxxxx'x of Chicago/West Street, Inc.
"PURCHASE MONEY INDEBTEDNESS" means Indebtedness (other than the
Obligations, but including Capitalized Lease Obligations), incurred at the time
of, or within
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120 days after, the acquisition of any fixed assets for the purpose of financing
all or any part of the acquisition cost thereof.
"QUALIFIED CASH" means, as of any date of determination, the amount of
unrestricted cash and Cash Equivalents of Borrower and its Subsidiaries that is
in Deposit Accounts or in Securities Accounts, or any combination thereof, and
which such Deposit Account or Securities Account is the subject of a Control
Agreement and is maintained by a branch office of the bank or securities
intermediary located within the United States.
"QUALIFIED IPO" means an underwritten public offering of common Stock
of the Borrower or the Parent pursuant to a registration statement filed with
the Commission (other than on Form S-8) or pursuant to another disclosure or
other filing document filed with any other applicable regulatory authority and
involving gross proceeds of not less than $30,000,000.
"REAL PROPERTY" means any estates or interests in real property now
owned or hereafter acquired by Borrower or its Subsidiaries and the improvements
thereto.
"REAL PROPERTY COLLATERAL" means the parcel or parcels of Real
Property identified on SCHEDULE R-1 and any Real Property a fee simple interest
in which is hereafter acquired by Borrower or its Domestic Subsidiaries and
which has a value of not less than $500,000, PROVIDED that no Excluded Assets
shall serve as Real Property Collateral.
"RECORD" means information that is inscribed on a tangible medium or
which is stored in an electronic or other medium and is retrievable in
perceivable form.
"REFINANCING INDEBTEDNESS" means any Indebtedness of Borrower or any
of its Subsidiaries issued in exchange for, or the net proceeds of which are
used to extend, refinance, renew, replace, defease or refund other Indebtedness
of Borrower or any of its Subsidiaries; provided that, other than with respect
to the Obligations:
(a) the principal amount (or accreted value, if applicable) of
such Refinancing Indebtedness does not exceed the principal amount (or accreted
value, if applicable) of the Indebtedness extended, refinanced, renewed,
replaced, defeased or refunded (plus all accrued interest on such Indebtedness
and the amount of all expenses and premiums incurred in connection therewith);
(b) such Refinancing Indebtedness has a final maturity date
after the final maturity date of, and has a Weighted Average Life to Maturity
equal to or greater than the Weighted Average Life to Maturity of, the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded;
(c) if the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded is subordinated in right of payment to the
Obligations, such Refinancing
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Indebtedness is subordinated in right of payment to the Obligations on terms at
least as favorable to Lender as those contained in the documentation governing
the Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; and
(d) such Indebtedness is recourse solely to Borrower or to the
Subsidiaries which are obligated on the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded.
"REMEDIAL ACTION" means all actions taken to (a) clean up, remove,
remediate, contain, treat, monitor, assess, evaluate, or in any way address
Hazardous Materials in the indoor or outdoor environment, (b) prevent or
minimize a release or threatened release of Hazardous Materials so they do not
migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment, (c) perform any pre-remedial studies,
investigations, or post-remedial operation and maintenance activities, or (d)
conduct any other actions authorized by 42 USC Section 9601.
"REQUIRED AVAILABILITY" means that the sum of (a) Excess Availability,
PLUS (b) Qualified Cash exceeds $10,000,000 (calculated without regard to the
limitation in clause (a) of the definition of Maximum Revolver Amount as if the
Maximum Revolver Amount is $15,000,000).
"RESERVE PERCENTAGE" means, on any day, for Lender, the maximum
percentage prescribed by the Board of Governors of the Federal Reserve System
(or any successor Governmental Authority) for determining the reserve
requirements (including any basic, supplemental, marginal, or emergency
reserves) that are in effect on such date with respect to eurocurrency funding
(currently referred to as "eurocurrency liabilities") of Lender, but so long as
Lender is not required or directed under applicable regulations to maintain such
reserves, the Reserve Percentage shall be zero.
"RESTAURANT" means a "Morton's" or "Xxxxxxxxx'x" restaurant operated
by the Borrower or any of its Subsidiaries, or any restaurant hereafter owned by
Borrower or any of its Subsidiaries as the result of a Permitted Investment or a
Permitted Acquisition.
"RESTAURANT SUBSIDIARY" means a Subsidiary that is engaged in the
ownership and operation of a Restaurant and that does not own any interest in
Intellectual Property.
"REVOLVER USAGE" means, as of any date of determination, the sum of
(a) the then extant amount of outstanding Advances, PLUS (b) the then extant
amount of the Letter of Credit Usage.
"SEC" means the United States Securities and Exchange Commission and
any successor thereto.
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"SECURITIES ACCOUNT" means a "securities account" as that term is
defined in the Code.
"SOLVENT" means, with respect to any Person on a particular date,
that, at fair valuations, the sum of such Person's assets is greater than all of
such Person's debts.
"STOCK" means all shares, options, warrants, interests,
participations, or other equivalents (regardless of how designated) of or in a
Person, whether voting or nonvoting, including common stock, preferred stock, or
any other "equity security" (as such term is defined in Rule 3a11-1 of the
General Rules and Regulations promulgated by the SEC under the Exchange Act).
"STOCK PLEDGE AGREEMENT" means a stock pledge agreement, in form and
substance reasonably satisfactory to Lender, executed and delivered by Borrower
and Guarantors to Lender with respect to the pledge of the Stock owned by
Borrower and Guarantors (except to the extent such Stock constitutes Excluded
Assets).
"STRATEGIC COSTS" means, merger, proxy and shareholder litigation
costs associated with Xxxxxx Xxxxxx Partners III, L.P.'s acquisition of Borrower
and incurred prior to July 31, 2002 and representing $7,732,000 for the twelve
months ending April 30, 2003.
"SUBSIDIARY" of a Person means a corporation, partnership, limited
liability company, or other entity in which that Person directly or indirectly
owns or controls the shares of Stock having ordinary voting power to elect a
majority of the board of directors (or appoint other comparable managers) of
such corporation, partnership, limited liability company, or other entity.
"TAXES" has the meaning set forth in SECTION 16.5.
"TRADEMARK SECURITY AGREEMENT" means a trademark security agreement
executed and delivered by each IP Entity and Lender, the form and substance of
which is reasonably satisfactory to Lender.
"TRUSTEE" means The Bank of New York in its capacity as Trustee and
Collateral Agent under the Indenture.
"TTM EBITDA" means, as of any date and with respect to a Person, the
EBITDA of such Person for the 12 month period ended as of the last day of the
month immediately preceding such date.
"UNITED STATES" means the United States of America.
"UNDERLYING ISSUER" means a third Person which is the beneficiary of
an L/C Undertaking and which has issued a letter of credit at the request of
Lender for the benefit of Borrower.
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"UNDERLYING LETTER OF CREDIT" means a letter of credit that has been
issued by an Underlying Issuer.
"UNPROFITABLE RESTAURANT" means a Restaurant (a) that has been
operated by Borrower or one of its Domestic Subsidiaries for at least 12 months
and whose TTM EBITDA is less than $1; and (b) that has been operated by Borrower
or one of its Domestic Subsidiaries for less than 12 months and whose EBITDA has
been less than $1 since inception on a cumulative basis.
"VOIDABLE TRANSFER" has the meaning set forth in SECTION 16.8.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing:
(a) the sum of the products obtained by multiplying (i) the
amount of each then remaining installment, sinking fund, serial maturity or
other required payments of principal, including payment at final maturity, in
respect of the Indebtedness, by (ii) the number of years (calculated to the
nearest one-twelfth) that will elapse between such date and the making of such
payment; by
(b) the then outstanding principal amount of such Indebtedness.
"XXXXX FARGO" means Xxxxx Fargo Bank, National Association, a national
banking association.
"WFF" means Xxxxx Fargo Foothill, Inc., a California corporation.
1.2 ACCOUNTING TERMS. All accounting terms not specifically defined herein
shall be construed in accordance with GAAP. When used herein, the term
"financial statements" shall include the notes and schedules thereto. Whenever
the term "Borrower" is used in respect of a financial covenant or a related
definition, it shall be understood to mean Borrower and its Subsidiaries on a
consolidated basis unless the context clearly requires otherwise.
1.3 CODE. Any terms used in this Agreement that are defined in the Code
shall be construed and defined as set forth in the Code unless otherwise defined
herein.
1.4 CONSTRUCTION. Unless the context of this Agreement or any other Loan
Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the term "including" is
not limiting, and the term "or" has, except where otherwise indicated, the
inclusive meaning represented by the phrase "and/or." The words "hereof,"
"herein," "hereby," "hereunder," and similar terms in this Agreement or any
other Loan Document refer to this Agreement or such other Loan Document, as the
case may be, as a whole and not to any particular provision of this Agreement or
such other Loan
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Document, as the case may be. Section, subsection, clause, schedule, and exhibit
references herein are to this Agreement unless otherwise specified. Any
reference in this Agreement or in the other Loan Documents to any agreement,
instrument, or document shall include all alterations, amendments, changes,
extensions, modifications, renewals, replacements, substitutions, joinders, and
supplements, thereto and thereof, as applicable (subject to any restrictions on
such alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements set forth herein). Any
reference herein to the repayment in full of the Obligations shall mean the
repayment in full in cash of all Obligations other than contingent
indemnification Obligations and other than any Bank Product Obligations that, at
such time, are allowed by the applicable Bank Product Provider to remain
outstanding and are not required to be repaid or cash collateralized pursuant to
the provisions of this Agreement. Any reference herein to any Person shall be
construed to include such Person's successors and assigns. Any requirement of a
writing contained herein or in the other Loan Documents shall be satisfied by
the transmission of a Record and any Record transmitted shall constitute a
representation and warranty as to the accuracy and completeness of the
information contained therein. The word "knowledge" when used with respect to
Borrower or any of its Subsidiaries shall be deemed to be a reference to the
knowledge of any employee of such Person that has responsibility for compliance
with the Loan Documents or of any senior officer of such Person.
1.5 SCHEDULES AND EXHIBITS. All of the schedules and exhibits attached to
this Agreement shall be deemed incorporated herein by reference.
2. LOAN AND TERMS OF PAYMENT.
2.1 REVOLVER ADVANCES
(a) Subject to the terms and conditions of this Agreement, and
during the term of this Agreement, Lender agrees to make advances ("ADVANCES")
to Borrower in an amount at any one time outstanding not to exceed an amount
equal to THE LESSER OF (i) the Maximum Revolver Amount LESS the Letter of Credit
Usage, or (ii) the Borrowing Base LESS the Letter of Credit Usage.
(b) Anything to the contrary in this SECTION 2.1 notwithstanding,
Lender shall have the right to establish reserves in such amounts, and with
respect to such matters, as Lender in its Permitted Discretion shall deem
necessary or appropriate, against the Borrowing Base, including reserves with
respect to (i) sums that Borrower is required to pay (such as taxes,
assessments, insurance premiums, or, in the case of leased assets, rents or
other amounts payable under such leases) and has failed to pay under any Section
of this Agreement or any other Loan Document, (ii) amounts owing by Borrower or
its Subsidiaries to any Person to the extent secured by a Lien on, or trust
over, any of the Collateral (other than any existing Permitted Lien set forth on
SCHEDULE P-1 which is specifically identified thereon as entitled to have
priority over the Lender's Liens), which Lien or trust, in the Permitted
Discretion of Lender likely would have a priority superior to the Lender's Liens
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(such as Liens or trusts in favor of landlords, warehousemen, carriers,
mechanics, materialmen, laborers, or suppliers, or Liens or trusts for AD
VALOREM, excise, sales, or other taxes where given priority under applicable
law) in and to such item of the Collateral, (iii) landlord liens, which reserve
shall consist of an amount equal to at least 3 months rent on Borrower's
Headquarters from the Closing Date through the date that Lender receives a
Collateral Access Agreement for such location, or (iv) from and after the date
that the Maximum Revolver Amount equals $15,000,000, for obligations outstanding
under "Capital Leases" listed on SCHEDULE 5.20. Promptly after establishing or
changing any reserves or Bank Product Reserves, Lender shall notify Borrower of
such establishment or change, PROVIDED that any failure or delay in notifying
Borrower of such establishment or change shall not make such establishment or
change invalid. The amount of any reserve established by Lender pursuant to this
SECTION 2.1(b) shall bear a reasonable relationship to the matter which is the
basis of such reserve.
(c) Lender shall have no obligation to make additional Advances
hereunder to the extent such additional Advances would cause the Revolver Usage
to exceed the Maximum Revolver Amount.
(d) Amounts borrowed pursuant to this Section 2.1 may be repaid
and, subject to the terms and conditions of this Agreement, reborrowed at any
time during the term of this Agreement.
2.2 [INTENTIONALLY OMITTED].
2.3 BORROWING PROCEDURES AND SETTLEMENTS.
(a) PROCEDURE FOR BORROWING. Each Borrowing shall be made by an
irrevocable written request by an Authorized Person delivered to Lender (which
notice must be received by Lender no later than 1:00 p.m. (New York time) on a
Business Day specifying (i) the amount of such Borrowing, and (ii) the requested
Funding Date, which shall be a Business Day and for Base Rate Loans, may be the
Business Day on which such notice is so delivered. At Lender's election, in lieu
of delivering the above-described written request, any Authorized Person may
give Lender telephonic notice of such request by the required time. In such
circumstances, Borrower agrees that any such telephonic notice will be confirmed
in writing within 24 hours of the giving of such notice and the failure to
provide such written confirmation shall not affect the validity of the request.
(b) MAKING OF ADVANCES. If Lender has received a timely request
for a Borrowing in accordance with the provisions hereof, and subject to the
satisfaction of the applicable terms and conditions set forth herein, Lender
shall make the proceeds of such Advance available to Borrower on the applicable
Funding Date by transferring immediately available funds equal to such proceeds
to Borrower's Designated Account.
2.4 PAYMENTS.
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(a) PAYMENTS BY BORROWER.
(i) Except as otherwise expressly provided herein, all payments
by Borrower shall be made to Lender's Account for the account of the
Lender and shall be made in immediately available funds, no later than
2:00 p.m. (New York time) on the date specified herein. Any payment
received by Lender later than 2:00 p.m. (New York time) shall be
deemed to have been received on the following Business Day and any
applicable interest or fee shall continue to accrue until such
following Business Day.
(b) APPLICATION OF PAYMENTS.
(i) All payments shall be remitted to Lender and all such
payments, and all proceeds of Collateral received by Lender, shall be
applied as follows:
(A) FIRST, to pay any Lender Expenses then due to Lender
under the Loan Documents, until paid in full,
(B) second, to pay any fees then due to Lender under the
Loan Documents until paid in full,
(C) THIRD, to pay interest due in respect of the Advances
until paid in full,
(D) FOURTH, so long as no Event of Default has occurred and
is continuing, and at Lender's election (which election Lender
agrees will not be made if an Overadvance would be created
thereby), to pay amounts then due and owing by Borrower or its
Subsidiaries in respect of Bank Products, until paid in full,
(E) FIFTH, so long as no Event of Default has occurred and
is continuing, to pay the principal of all Advances until paid in
full,
(F) SIXTH, if an Event of Default has occurred and is
continuing, ratably (i) to pay the principal of all Advances
until paid in full, (ii) to Lender, to be held by Lender as cash
collateral in an amount up to 105% of the then extant Letter of
Credit Usage until paid in full, and (iii) to Lender, to be held
by Lender, for the benefit of the Bank Products Providers, as
cash collateral in an amount up to the amount of the Bank Product
Reserve established prior to the occurrence of, and not in
contemplation of, the subject Event of Default until Borrower's
and its Subsidiaries' obligations in respect of the then extant
Bank Products have been paid in full or the cash collateral
amount has been exhausted,
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(G) SEVENTH, if an Event of Default has occurred and is
continuing, to pay any other Obligations (including the provision
of amounts to Lender, to be held by Lender, for the benefit of
the Bank Product Providers, as cash collateral in an amount up to
the amount determined by Lender in its Permitted Discretion as
the amount necessary to secure Borrower's and its Subsidiaries'
obligations in respect of the then extant Bank Products), and
(H) EIGHTH, to Borrower (to be wired to the Designated
Account) or such other Person entitled thereto under applicable
law.
(ii) In each instance, so long as no Event of Default has
occurred and is continuing, this SECTION 2.4(b) shall not be deemed to
apply to any payment by Borrower specified by Borrower to be for the
payment of specific Obligations then due and payable (or prepayable)
under any provision of this Agreement.
(iii) For purposes of the foregoing, "paid in full" means
payment of all amounts owing under the Loan Documents according to the
terms thereof, including loan fees, service fees, professional fees,
interest (and specifically including interest accrued after the
commencement of any Insolvency Proceeding), default interest, interest
on interest, and expense reimbursements, whether or not any of the
foregoing would be or is allowed or disallowed in whole or in part in
any Insolvency Proceeding.
(iv) In the event of a direct conflict between the priority
provisions of this SECTION 2.4 and other provisions contained in any
other Loan Document, it is the intention of the parties hereto that
such priority provisions in such documents shall be read together and
construed, to the fullest extent possible, to be in concert with each
other. In the event of any actual, irreconcilable conflict that cannot
be resolved as aforesaid, the terms and provisions of this SECTION 2.4
shall control and govern.
2.5 OVERADVANCES. If, at any time or for any reason, the amount of
Obligations (other than Bank Product Obligations) owed by Borrower to Lender
pursuant to SECTION 2.1 OR SECTION 2.12 is greater than either the Dollar or
percentage limitations set forth in SECTION 2.1 OR SECTION 2.12, as applicable
(an "OVERADVANCE"), Borrower immediately shall pay to Lender, in cash, the
amount of such excess, which amount shall be used by Lender to reduce the
Obligations in accordance with the priorities set forth in SECTION 2.4(b). In
addition, Borrower hereby promises to pay the Obligations (including principal,
interest, fees, costs, and expenses) in Dollars in full as and when due and
payable under the terms of this Agreement and the other Loan Documents.
2.6 INTEREST RATES AND LETTER OF CREDIT FEE: RATES, PAYMENTS, AND
CALCULATIONS.
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(a) INTEREST RATES. Except as provided in clause (c) below, all
Obligations (except for undrawn Letters of Credit and except for Bank Product
Obligations) that have been charged to the Loan Account pursuant to the terms
hereof shall bear interest on the Daily Balance thereof as follows (i) if the
relevant Obligation is an Advance that is a LIBOR Rate Loan, at a per annum rate
equal to the LIBOR Rate plus the LIBOR Rate Margin and (ii) otherwise, at a per
annum rate equal to the Base Rate plus the Base Rate Margin.
(b) LETTER OF CREDIT FEE. Borrower shall pay Lender a Letter of
Credit fee (in addition to the charges, commissions, fees, and costs set forth
in SECTION 2.11(d)) which shall accrue at a rate equal to 4.0% per annum TIMES
the Daily Balance of the undrawn amount of all outstanding Letters of Credit.
(c) DEFAULT RATE. Upon the occurrence and during the continuation
of an Event of Default (and at the election of Lender),
(i) all Obligations (except for undrawn Letters of Credit and
except for Bank Product Obligations) that have been charged to the
Loan Account pursuant to the terms hereof shall bear interest on the
Daily Balance thereof at a per annum rate equal to 2 percentage points
above the per annum rate otherwise applicable hereunder, and
(ii) the Letter of Credit fee provided for above shall be
increased to 2 percentage points above the per annum rate otherwise
applicable hereunder.
(d) PAYMENT. Except as provided to the contrary in Section
2.13(a), interest, Letter of Credit fees, and all other fees payable hereunder
shall be due and payable, in arrears, on the first day of each month at any time
that Obligations or obligation to extend credit hereunder are outstanding.
Borrower hereby authorizes Lender, from time to time without prior notice to
Borrower, to charge such interest and fees, all Lender Expenses (as and when
incurred), the charges, commissions, fees, and costs provided for in SECTION
2.12(e) (as and when accrued or incurred), the fees and costs provided for in
SECTION 2.11 (as and when accrued or incurred), and all other payments as and
when due and payable under any Loan Document (including any amounts due and
payable to the Bank Product Providers in respect of Bank Products up to the
amount of the then extant Bank Products Reserve) to Borrower's Loan Account,
which amounts thereafter shall constitute Advances hereunder and shall accrue
interest at the rate then applicable to Advances hereunder. Any interest not
paid when due shall be compounded by being charged to Borrower's Loan Account
and shall thereafter constitute Advances hereunder and shall accrue interest at
the rate then applicable to Advances that are Base Rate Loans hereunder.
(e) COMPUTATION. All interest and fees chargeable under the Loan
Documents shall be computed on the basis of a 360 day year for the actual number
of days elapsed. In the event the Base Rate is changed from time to time
hereafter, the rates of
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interest hereunder based upon the Base Rate automatically and immediately shall
be increased or decreased by an amount equal to such change in the Base Rate.
(f) INTENT TO LIMIT CHARGES TO MAXIMUM LAWFUL RATE. In no event
shall the interest rate or rates payable under this Agreement, plus any other
amounts paid in connection herewith, exceed the highest rate permissible under
any law that a court of competent jurisdiction shall, in a final determination,
deem applicable. Borrower and Lender, in executing and delivering this
Agreement, intend legally to agree upon the rate or rates of interest and manner
of payment stated within it; PROVIDED, HOWEVER, that, anything contained herein
to the contrary notwithstanding, if said rate or rates of interest or manner of
payment exceeds the maximum allowable under applicable law, then, IPSO FACTO, as
of the date of this Agreement, Borrower is and shall be liable only for the
payment of such maximum as allowed by law, and payment received from Borrower in
excess of such legal maximum, whenever received, shall be applied to reduce the
principal balance of the Obligations to the extent of such excess.
2.7 CASH MANAGEMENT.
(a) Borrower shall and shall cause Xxxxxx'x of Chicago, Inc. to
establish and maintain cash management services of a type and on terms
reasonably satisfactory to Lender at one or more of the banks set forth on
SCHEDULE 2.7(a) (each, a "CASH MANAGEMENT BANK"), and deposit or cause to be
deposited promptly, and in any event no later than the first Business Day after
the date of receipt thereof, all of their Collections (including those sent
directly by their Account Debtors to a Cash Management Bank) into a bank account
in Borrower's or Xxxxxx'x of Chicago, Inc.'s name (a "CASH MANAGEMENT ACCOUNT")
at one of the Cash Management Banks.
(b) Each Cash Management Bank shall establish and maintain Cash
Management Agreements with Lender and Borrower, in form and substance acceptable
to Lender. Each such Cash Management Agreement shall provide, among other
things, that (i) all items of payment deposited in such Cash Management Account
and proceeds thereof are held by such Cash Management Bank as agent or
bailee-in-possession for Lender, (ii) the Cash Management Bank has no rights of
setoff or recoupment or any other claim against the applicable Cash Management
Account other than for payment of its service fees and other charges directly
related to the administration of such Cash Management Account and for returned
checks or other items of payment, and (iii) from and after the giving of notice
by Lender to the Cash Management Bank, the Cash Management Bank shall
immediately remit all amounts in the applicable Cash Management Account to the
Lender's Account. Lender agrees that it will not give such notice to the Cash
Management Bank unless an Event of Default has occurred and is continuing.
Except as set forth in SECTION 2.7(c), no arrangement contemplated by this
SECTION 2.7 shall be modified without the prior written consent of Lender which
consent shall not be unreasonably withheld. Upon the occurrence and during the
continuance of an Event of Default, Lender may elect to notify the Cash
Management
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Bank (without notice to the Borrower, to any Guarantor or to any other Person)
to remit all amounts received in the Cash Management Account to the Lender's
Account. Once the Event of Default is cured or waived, Lender shall notify the
Cash Management Banks to no longer remit amounts in the Cash Management Account
to the Lender's Account.
(c) At any time that the balance in any Deposit Account or
Securities Account (other a Deposit Account or Securities Account that is
subject to a Control Agreement) exceeds $30,000 per Restaurant (calculated as
$30,000 per Restaurant for each Restaurant for which receipts are deposited into
such Deposit Account or Securities Account) for any consecutive five (5) day
period, Borrower shall immediately (i) transfer or cause to be transferred into
the Concentration Account an amount equal to the amount of such excess, or (ii)
deliver a Control Agreement to Lender with respect to such Deposit Account or
Securities Account.
(d) Borrower shall, and shall cause each Domestic Subsidiary that
receives Collections through credit card charges to, establish and maintain
Credit Card Agreements with Lender and each Credit Card Processor. Each such
Credit Card Agreement shall provide, among other things, that each such Credit
Card Processor shall transfer all proceeds of credit card charges for sales by
Borrower or such Domestic Subsidiary, as applicable, received by it (or other
amounts payable by such Credit Card Processor) into the Concentration Account on
a daily basis. Neither Borrower nor any Domestic Subsidiary may change any
direction or designation set forth in the Credit Card Agreements regarding
payment of charges without the prior written consent of Lender.
(e) So long as no Default or Event of Default has occurred and is
continuing, Borrower may amend SCHEDULE 2.7(a) to add or replace a Cash
Management Bank or Cash Management Account; PROVIDED, HOWEVER, that (i) such
prospective Cash Management Bank shall be reasonably satisfactory to Lender and
Lender shall have consented in writing in advance to the opening of such Cash
Management Account with the prospective Cash Management Bank, and (ii) prior to
the time of the opening of such Cash Management Account, Borrower (or its
Subsidiary, as applicable) and such prospective Cash Management Bank shall have
executed and delivered to Lender a Cash Management Agreement. Borrower (or its
Subsidiaries, as applicable) shall close any of its Cash Management Accounts
(and establish replacement cash management accounts in accordance with the
foregoing sentence) promptly and in any event within 30 days of notice from
Lender that the creditworthiness of any Cash Management Bank is no longer
acceptable in Lender's reasonable judgment, or as promptly as practicable and in
any event within 60 days of notice from Lender that the operating performance,
funds transfer, or availability procedures or performance of the Cash Management
Bank with respect to Cash Management Accounts or Lender's liability under any
Cash Management Agreement with such Cash Management Bank is no longer acceptable
in Lender's reasonable judgment.
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(f) The Cash Management Accounts shall be cash collateral
accounts, with all cash, checks and similar items of payment in such accounts
securing payment of the Obligations, and in which Borrower hereby grants a Lien
to Lender.
2.8 CREDITING PAYMENTS. The receipt of any payment item by Lender (whether
from transfers to Lender pursuant to the Control Agreements or otherwise) shall
not be considered a payment on account unless such payment item is a wire
transfer of immediately available federal funds made to the Lender's Account or
unless and until such payment item is honored when presented for payment. Should
any payment item not be honored when presented for payment, then Borrower shall
be deemed not to have made such payment and interest shall be calculated
accordingly. Anything to the contrary contained herein notwithstanding, any
payment item shall be deemed received by Lender only if it is received into the
Lender's Account on a Business Day on or before 2:00 p.m. (New York time). If
any payment item is received into the Lender's Account on a non-Business Day or
after 2:00 p.m. (New York time) on a Business Day, it shall be deemed to have
been received by Lender as of the opening of business on the immediately
following Business Day.
2.9 DESIGNATED ACCOUNT. Lender is authorized to make the Advances, and
Lender is authorized to issue the Letters of Credit, under this Agreement based
upon telephonic or other instructions received from anyone purporting to be an
Authorized Person, or without instructions if pursuant to SECTION 2.6(d).
Borrower agrees to establish and maintain the Designated Account with the
Designated Account Bank for the purpose of receiving the proceeds of the
Advances requested by Borrower and made by Lender hereunder. Unless otherwise
agreed by Lender and Borrower, any Advance requested by Borrower and made by
Lender hereunder shall be made to the Designated Account.
2.10 MAINTENANCE OF LOAN ACCOUNT; STATEMENTS OF OBLIGATIONS. Lender shall
maintain an account on its books in the name of Borrower (the "LOAN ACCOUNT") on
which Borrower will be charged with all Advances made by Lender to Borrower or
for Borrower's account, the Letters of Credit issued by Lender for Borrower's
account, and with all other payment Obligations hereunder or under the other
Loan Documents (except for Bank Product Obligations), including, accrued
interest, fees and expenses, and Lender Expenses, in each case, to the extent
not paid when due. In accordance with SECTION 2.8, the Loan Account will be
credited with all payments received by Lender from Borrower or for Borrower's
account. Lender shall render statements regarding the Loan Account to Borrower,
including principal, interest, fees, and including an itemization of all charges
and expenses constituting Lender Expenses owing, and such statements, absent
manifest error, shall be conclusively presumed to be correct and accurate and
constitute an account stated between Borrower and Lender unless, within 30 days
after receipt thereof by Borrower, Borrower shall deliver to Lender written
objection thereto describing the error or errors contained in any such
statements.
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2.11 FEES. Borrower shall pay to Lender the following fees and charges,
which fees and charges shall be non-refundable when paid (irrespective of
whether this Agreement is terminated thereafter):
(a) FEE LETTER FEES. As and when due and payable under the terms
of the Fee Letter, the fees set forth in the Fee Letter, and
(b) AUDIT, APPRAISAL, AND VALUATION CHARGES. For purposes of this
subsection (b), the term "Audit" shall mean all audits, appraisals, and
valuations conducted by Agent under this Agreement except valuations to
determine Enterprise Value. Audit fees and charges shall be charged as follows
(i) a fee of $850 per day, per auditor, plus out-of-pocket expenses for each
Audit of Borrower performed by personnel employed by Lender, (ii) a fee of
$1,500 per day per appraiser, plus out-of-pocket expenses, for each Audit of the
Collateral, or any portion thereof, performed by personnel employed by Lender,
and (iii) the actual charges paid or incurred by Lender if it elects to employ
the services of one or more third Persons to perform Audits of Borrower or its
Subsidiaries, to appraise the Collateral, or any portion thereof, or to assess
Borrower's or its Subsidiaries' business valuation, including valuations to
determine Enterprise Value. Notwithstanding anything to the contrary contained
herein, but only so long as no Default or Event of Default has occurred and is
continuing, (1) during the first 6 months after the Closing Date, Borrower shall
not be required to pay for more than one Audit, (2) if the average Revolver
Usage during the first 6 months after the Closing Date did not exceed
$8,000,000, then Borrower shall not be required to pay for more than one
additional Audit during the first 12 months after the Closing Date (for a total
of 2 such Audits during the first 12 months after the Closing Date) and if such
average Revolver Usage during such first 6 month period exceeded $8,000,000,
then Borrower shall not be required to pay for more than two such additional
Audits during the first 12 months after the Closing Date (for a total of 3 such
Audits during such first 12 month period), (3) after the first anniversary of
the Closing Date, (x) Borrower shall not be required to pay for more than 2
Audits per year if the average Revolver Usage for the immediately preceding year
did not exceed $8,000,000, and (y) if the average Revolver Usage exceeded
$8,000,000, Borrower shall not be required to pay for more than 3 Audits per
year. In all cases, so long as no Default or Event of Default has occurred and
is continuing, Borrower shall not be required to pay for more than one valuation
to determine Enterprise Value per year in addition to the Audits permitted. So
long as no Default or Event of Default has occurred and is continuing, the costs
to Borrower (including out-of-pocket expenses) of each Audit (but not of any
valuation to determine Enterprise Value) shall not exceed $37,500 per audit.
2.12 LETTERS OF CREDIT
(a) Subject to the terms and conditions of this Agreement, Lender
agrees to issue letters of credit for the account of Borrower (each, an "L/C")
or to purchase participations or execute indemnities or reimbursement
obligations (each such undertaking,
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an "L/C UNDERTAKING") with respect to letters of credit issued by an Underlying
Issuer (as of the Closing Date, the prospective Underlying Issuer is to be Xxxxx
Fargo) for the account of Borrower. To request the issuance of an L/C or an L/C
Undertaking (or the amendment, renewal, or extension of an outstanding L/C or
L/C Undertaking), Borrower shall hand deliver or telecopy (or transmit by
electronic communication, if arrangements for doing so have been approved by
Lender) to Lender and Lender (reasonably in advance of the requested date of
issuance, amendment, renewal, or extension) a notice requesting the issuance of
an L/C or L/C Undertaking, or identifying the L/C or L/C Undertaking to be
amended, renewed, or extended, the date of issuance, amendment, renewal, or
extension, the date on which such L/C or L/C Undertaking is to expire, the
amount of such L/C or L/C Undertaking, the name and address of the beneficiary
thereof (or the beneficiary of the Underlying Letter of Credit, as applicable),
and such other information as shall be necessary to prepare, amend, renew, or
extend such L/C or L/C Undertaking. If requested by Lender, Borrower also shall
be an applicant under the application with respect to any Underlying Letter of
Credit that is to be the subject of an L/C Undertaking. Lender shall have no
obligation to issue a Letter of Credit if any of the following would result
after giving effect to the requested Letter of Credit:
(i) the Letter of Credit Usage would exceed the Borrowing Base
LESS the then extant amount of outstanding Advances, or
(ii) the Letter of Credit Usage would exceed $7,500,000, or
(iii) the Letter of Credit Usage would exceed the Maximum
Revolver Amount LESS the then extant amount of outstanding Advances.
Borrower and Lender acknowledge and agree that certain Underlying
Letters of Credit may be issued to support letters of credit that already are
outstanding as of the Closing Date. Each Letter of Credit (and corresponding
Underlying Letter of Credit) shall be in form and substance acceptable to Lender
(in the exercise of its Permitted Discretion), including the requirement that
the amounts payable thereunder must be payable in Dollars. If Lender is
obligated to advance funds under a Letter of Credit, Borrower immediately shall
reimburse such L/C Disbursement to Lender by paying to Lender an amount equal to
such L/C Disbursement not later than 2:00 p.m., New York time, on the date that
such L/C Disbursement is made, if Borrower shall have received written or
telephonic notice of such L/C Disbursement prior to 11:00 a.m., New York time,
on such date, or, if such notice has not been received by Borrower prior to such
time on such date, then not later than 2:00 p.m., New York time, on the Business
Day that Borrower receives such notice, if such notice is received prior to
11:00 a.m., New York time, on the date of receipt, and, in the absence of such
reimbursement, the L/C Disbursement immediately and automatically shall be
deemed to be an Advance hereunder and, thereafter, shall bear interest at the
rate then applicable to Advances that are Base Rate Loans under SECTION 2.6. To
the extent an L/C Disbursement is
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deemed to be an Advance hereunder, Borrower's obligation to reimburse such L/C
Disbursement shall be discharged and replaced by the resulting Advance.
(b) Borrower hereby agrees to indemnify, save, defend, and hold
Lender harmless from any loss, cost, expense, or liability, and reasonable
attorneys fees incurred by Lender arising out of or in connection with any
Letter of Credit; PROVIDED, HOWEVER, that Borrower shall not be obligated
hereunder to indemnify for any loss, cost, expense, or liability to the extent
that it is caused by the gross negligence or willful misconduct of Lender.
Borrower agrees to be bound by the Underlying Issuer's regulations and
interpretations of any Underlying Letter of Credit or by Lender's
interpretations of any L/C issued by Lender to or for Borrower's account, even
though this interpretation may be different from Borrower's own, and Borrower
understands and agrees that Lender shall not be liable for any error,
negligence, or mistake, whether of omission or commission, in following
Borrower's instructions or those contained in the Letter of Credit or any
modifications, amendments, or supplements thereto. Borrower understands that the
L/C Undertakings may require Lender to indemnify the Underlying Issuer for
certain costs or liabilities arising out of claims by Borrower against such
Underlying Issuer. Borrower hereby agrees to indemnify, save, defend, and hold
Lender harmless with respect to any loss, cost, expense (including reasonable
attorneys fees), or liability incurred by Lender under any L/C Undertaking as a
result of Lender's indemnification of any Underlying Issuer; PROVIDED, HOWEVER,
that Borrower shall not be obligated hereunder to indemnify for any loss, cost,
expense, or liability to the extent that it is caused by the gross negligence or
willful misconduct of Lender.
(c) Borrower hereby authorizes and directs any Underlying Issuer
to deliver to Lender all instruments, documents, and other writings and property
received by such Underlying Issuer pursuant to such Underlying Letter of Credit
and to accept and rely upon Lender's instructions with respect to all matters
arising in connection with such Underlying Letter of Credit and the related
application.
(d) Any and all charges, commissions, fees, and costs incurred by
Lender relating to Underlying Letters of Credit shall be Lender Expenses for
purposes of this Agreement and immediately shall be reimbursable by Borrower to
Lender for the account of Lender; it being acknowledged and agreed by Borrower
that, as of the Closing Date, the usage charge imposed by the prospective
Underlying Issuer is .85% per annum times the face amount of each Underlying
Letter of Credit, that such issuance charge may be changed from time to time,
and that the Underlying Issuer also imposes a schedule of charges for
amendments, extensions, drawings, and renewals.
(e) If by reason of (i) any change after the Closing Date in any
applicable law, treaty, rule, or regulation or any change in the interpretation
or application thereof by any Governmental Authority, or (ii) compliance by the
Underlying Issuer or Lender with any direction, request, or requirement
(irrespective of whether having the force
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of law) of any Governmental Authority or monetary authority including,
Regulation D of the Federal Reserve Board as from time to time in effect (and
any successor thereto):
(i) any reserve, deposit, or similar requirement is or shall
be imposed or modified in respect of any Letter of Credit issued
hereunder, or
(ii) there shall be imposed on the Underlying Issuer or Lender
any other condition regarding any Underlying Letter of Credit or any
Letter of Credit issued pursuant hereto,
and the result of the foregoing is to increase, directly or indirectly, the cost
to Lender of issuing, making, guaranteeing, or maintaining any Letter of Credit
or to reduce the amount receivable in respect thereof by Lender, then, and in
any such case, Lender may, at any time within a reasonable period after the
additional cost is incurred or the amount received is reduced, notify Borrower,
and Borrower shall pay on demand such amounts as Lender may specify to be
necessary to compensate Lender for such additional cost or reduced receipt,
together with interest on such amount from the date of such demand until payment
in full thereof at the rate then applicable to Base Rate Loans hereunder. The
determination by Lender of any amount due pursuant to this Section, as set forth
in a certificate setting forth the calculation thereof in reasonable detail,
shall, in the absence of manifest or demonstrable error, be final and conclusive
and binding on all of the parties hereto.
2.13 LIBOR OPTION.
(a) INTEREST AND INTEREST PAYMENT DATES. In lieu of having
interest charged at the rate based upon the Base Rate, Borrower shall have the
option (the "LIBOR OPTION") to have interest on all or a portion of the Advances
be charged at a rate of interest based upon the LIBOR Rate. Interest on LIBOR
Rate Loans shall be payable on the earliest of (i) the last day of the Interest
Period applicable thereto, (ii) the occurrence of an Event of Default in
consequence of which Lender has elected to accelerate the maturity of all or any
portion of the Obligations, (iii) the last day of the third month of the
Interest Period applicable thereto, or (iv) termination of this Agreement
pursuant to the terms hereof. On the last day of each applicable Interest
Period, unless Borrower properly has exercised the LIBOR Option with respect
thereto, the interest rate applicable to such LIBOR Rate Loan automatically
shall convert to the rate of interest then applicable to Base Rate Loans of the
same type hereunder. At any time that an Event of Default has occurred and is
continuing, Borrower no longer shall have the option to request that Advances
bear interest at the LIBOR Rate and Lender shall have the right to convert the
interest rate on all outstanding LIBOR Rate Loans to the rate then applicable to
Base Rate Loans hereunder.
(b) LIBOR Election.
(i) Borrower may, at any time and from time to time, so long
as no Event of Default has occurred and is continuing, elect to
exercise the LIBOR
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Option by notifying Lender prior to 2:00 p.m. (New York time) at least
3 Business Days prior to the commencement of the proposed Interest
Period (the "LIBOR DEADLINE"). Notice of Borrower's election of the
LIBOR Option for a permitted portion of the Advances and an Interest
Period pursuant to this Section shall be made by delivery to Lender of
a LIBOR Notice received by Lender before the LIBOR Deadline, or by
telephonic notice received by Lender before the LIBOR Deadline (to be
confirmed by delivery to Lender of a LIBOR Notice received by Lender
prior to 6:00 p.m. (New York time) on the same day.
(ii) Each LIBOR Notice shall be irrevocable and binding on
Borrower. In connection with each LIBOR Rate Loan, Borrower shall
indemnify, defend, and hold Lender harmless against any loss, cost, or
expense incurred by Lender as a result of (a) the payment of any
principal of any LIBOR Rate Loan other than on the last day of an
Interest Period applicable thereto (including as a result of an Event
of Default), (b) the conversion of any LIBOR Rate Loan other than on
the last day of the Interest Period applicable thereto, or (c) the
failure to borrow, convert, continue or prepay any LIBOR Rate Loan on
the date specified in any LIBOR Notice delivered pursuant hereto (such
losses, costs, and expenses, collectively, "FUNDING LOSSES"). Funding
Losses shall be deemed to equal the amount determined by Lender to be
the excess, if any, of (i) the amount of interest that would have
accrued on the principal amount of such LIBOR Rate Loan had such event
not occurred, at the LIBOR Rate that would have been applicable
thereto, for the period from the date of such event to the last day of
the then current Interest Period therefor (or, in the case of a
failure to borrow, convert, or continue, for the period that would
have been the Interest Period therefor), MINUS (ii) the amount of
interest that would accrue on such principal amount for such period at
the interest rate which Lender would be offered were it to be offered,
at the commencement of such period, Dollar deposits of a comparable
amount and period in the London interbank market. A certificate of
Lender delivered to Borrower setting forth any amount or amounts that
Lender is entitled to receive pursuant to this Section shall be
conclusive absent manifest error.
(iii) Borrower shall have not more than 5 LIBOR Rate Loans in
effect at any given time. Borrower only may exercise the LIBOR Option
for LIBOR Rate Loans of at least $500,000 and integral multiples of
$200,000 in excess thereof.
(c) PREPAYMENTS. Borrower may prepay LIBOR Rate Loans at any
time; PROVIDED, HOWEVER, that in the event that LIBOR Rate Loans are prepaid on
any date that is not the last day of the Interest Period applicable thereto,
including as a result of any
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automatic prepayment through the required application by Lender of proceeds of
Borrower's and its Subsidiaries' Collections in accordance with SECTION 2.4(b)
or for any other reason, including early termination of the term of this
Agreement or acceleration of all or any portion of the Obligations pursuant to
the terms hereof, Borrower shall indemnify, defend, and hold Lender and its
Participants harmless against any and all Funding Losses in accordance with
clause (b)(ii) above.
(d) Special Provisions Applicable to LIBOR Rate.
(i) The LIBOR Rate may be adjusted by Lender on a prospective
basis to take into account any additional or increased costs to Lender
of maintaining or obtaining any eurodollar deposits or increased costs
due to changes in applicable law occurring subsequent to the
commencement of the then applicable Interest Period, including changes
in tax laws (except changes of general applicability in corporate
income tax laws) and changes in the reserve requirements imposed by
the Board of Governors of the Federal Reserve System (or any
successor), excluding the Reserve Percentage, which additional or
increased costs would materially increase the cost of funding loans
bearing interest at the LIBOR Rate. In any such event, Lender shall
give Borrower notice of such a determination and adjustment and, upon
its receipt of the notice from Lender, Borrower may, by notice to
Lender (y) require Lender to furnish to Borrower a statement setting
forth the basis for adjusting such LIBOR Rate and the method for
determining the amount of such adjustment, or (z) repay the LIBOR Rate
Loans with respect to which such adjustment is made (together with any
amounts due under clause (b)(ii) above).
(ii) In the event that any change in market conditions or any
law, regulation, treaty, or directive, or any change therein or in the
interpretation of application thereof, shall at any time after the
date hereof, in the reasonable opinion of Lender, make it unlawful or
impractical for Lender to fund or maintain LIBOR Advances or to
continue such funding or maintaining, or to determine or charge
interest rates at the LIBOR Rate, Lender shall give notice of such
changed circumstances to Borrower and (y) in the case of any LIBOR
Rate Loans that are outstanding, the date specified in Lender's notice
shall be deemed to be the last day of the Interest Period of such
LIBOR Rate Loans, and interest upon the LIBOR Rate Loans thereafter
shall accrue interest at the rate then applicable to Base Rate Loans,
and (z) Borrower shall not be entitled to elect the LIBOR Option until
Lender determines that it would no longer be unlawful or impractical
to do so.
(e) NO REQUIREMENT OF MATCHED FUNDING. Anything to the contrary
contained herein notwithstanding, neither Lender, nor any of its Participants,
is required
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actually to acquire eurodollar deposits to fund or otherwise match fund any
Obligation as to which interest accrues at the LIBOR Rate. The provisions of
this Section shall apply as if Lender or its Participants had match funded any
Obligation as to which interest is accruing at the LIBOR Rate by acquiring
eurodollar deposits for each Interest Period in the amount of the LIBOR Rate
Loans.
2.14 CAPITAL REQUIREMENTS. If, after the date hereof, Lender determines
that (i) the adoption of or change in any law, rule, regulation or guideline
regarding capital requirements for banks or bank holding companies, or any
change in the interpretation or application thereof by any Governmental
Authority charged with the administration thereof, or (ii) compliance by Lender
or its parent bank holding company with any guideline, request, or directive of
any such entity regarding capital adequacy (whether or not having the force of
law), has the effect of reducing the return on Lender's or such holding
company's capital as a consequence of Lender's credit obligations hereunder to a
level below that which Lender or such holding company could have achieved but
for such adoption, change, or compliance (taking into consideration Lender's or
such holding company's then existing policies with respect to capital adequacy
and assuming the full utilization of such entity's capital) by any amount deemed
by Lender to be material, then Lender may notify Borrower thereof. Following
receipt of such notice, Borrower agrees to pay Lender the amount of such
reduction of return of capital as and when such reduction is determined, payable
within 90 days after presentation by Lender of a statement in the amount and
setting forth in reasonable detail Lender's calculation thereof and the
assumptions upon which such calculation was based (which statement shall be
deemed true and correct absent manifest error). In determining such amount,
Lender may use any reasonable averaging and attribution methods.
3. CONDITIONS; TERM OF AGREEMENT.
3.1 CONDITIONS PRECEDENT TO THE INITIAL EXTENSION OF CREDIT. The obligation
of Lender to make the initial Advance (or otherwise to extend any credit
provided for hereunder), is subject to the fulfillment, to the satisfaction of
Lender, of each of the conditions precedent set forth below:
(a) the Closing Date shall occur on or before July 7, 2003;
(b) Lender shall have received appropriate financing statements
on Form UCC-1 to be duly filed in such office or offices as may be necessary or,
in the opinion of Lender, desirable to perfect the Lender's Liens in and to the
Collateral;
(c) Lender shall have received each of the following documents,
in form and substance reasonably satisfactory to Lender, duly executed, and each
such document shall be in full force and effect:
(i) the Fee Letter,
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(ii) the Guarantor Security Agreement,
(iii) the Guaranty,
(iv) the Intercompany Subordination Agreement,
(v) the Intercreditor Agreement,
(vi) the Officers' Certificate,
(vii) the Pay-Off Letter, together with UCC termination
statements and other documentation evidencing the termination by
Existing Lender of its Liens in and to the properties and assets of
Borrower and its Subsidiaries,
(viii) the Stock Pledge Agreement, together with all certificates
representing the shares of Stock pledged thereunder, as well as Stock
powers with respect thereto endorsed in blank, and
(ix) the Trademark Security Agreement;
(d) Lender shall have received a certificate from the Secretary
of Borrower attesting to the resolutions of Borrower's Board of Directors
authorizing its execution, delivery, and performance of this Agreement and the
other Loan Documents to which Borrower is a party and authorizing specific
officers of Borrower to execute the same;
(e) Lender shall have received copies of Borrower's Governing
Documents, as amended, modified, or supplemented to the Closing Date, certified
by the Secretary of Borrower;
(f) Lender shall have received a certificate of status with
respect to Borrower, dated within 20 days of the Closing Date, such certificate
to be issued by the appropriate officer of the jurisdiction of organization of
Borrower, which certificate shall indicate that Borrower is in good standing in
such jurisdiction;
(g) Lender shall have received certificates of status with
respect to Borrower, each dated within 30 days of the Closing Date, such
certificates to be issued by the appropriate officer of the jurisdictions (other
than the jurisdiction of organization of Borrower) in which its failure to be
duly qualified or licensed would constitute a Material Adverse Change, which
certificates shall indicate that Borrower is in good standing in such
jurisdictions;
(h) Lender shall have received a certificate from the Secretary
of each Guarantor attesting to the resolutions of such Guarantor's board of
directors authorizing its execution, delivery, and performance of the Loan
Documents to which such Guarantor is a party and authorizing specific officers
of such Guarantor to execute the same;
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(i) Lender shall have received copies of each Guarantor's
Governing Documents, as amended, modified, or supplemented to the Closing Date,
certified by the Secretary of such Guarantor;
(j) Lender shall have received a certificate of status with
respect to each Guarantor, dated within 10 days of the Closing Date, such
certificate to be issued by the appropriate officer of the jurisdiction of
organization of such Guarantor, which certificate shall indicate that Guarantor
is in good standing in such jurisdiction;
(k) Lender shall have received certificates of status with
respect to each Guarantor, each dated within 30 days of the Closing Date, such
certificates to be issued by the appropriate officer of the jurisdictions (other
than the jurisdiction of organization of such Guarantor) in which its failure to
be duly qualified or licensed would constitute a Material Adverse Change, which
certificates shall indicate that such Guarantor is in good standing in such
jurisdictions;
(l) Lender shall have received a certificate of insurance,
together with the endorsements thereto, as are required by SECTION 6.8, the form
and substance of which shall be satisfactory to Lender;
(m) Borrower shall use its reasonable best efforts to obtain a
Collateral Access Agreement, executed and delivered by each party thereto, with
respect to Borrower's Headquarters;
(n) Lender shall have received an opinion of Borrower's counsel
in form and substance reasonably satisfactory to Lender;
(o) Borrower shall have the Required Availability after giving
effect to the initial extensions of credit hereunder and the payment of all fees
and expenses required to be paid by Borrower on the Closing Date under this
Agreement or the other Loan Documents;
(p) Lender shall have completed its business, legal, and
collateral due diligence, including a collateral audit and review of Borrower's
and its Subsidiaries books and records and verification of Borrower's
representations and warranties to Lender, the results of which shall be
reasonably satisfactory to Lender;
(q) Lender shall have received completed reference checks with
respect to Borrower's senior management, the results of which are reasonably
satisfactory to Lender in its sole discretion;
(r) Lender shall have received Borrower's Closing Date Business
Plan;
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(s) Borrower shall have paid all Lender Expenses incurred in
connection with the transactions evidenced by this Agreement;
(t) Borrower and each of its Subsidiaries shall have received all
licenses, approvals or evidence of other actions required by any Governmental
Authority in connection with the execution and delivery by Borrower or its
Subsidiaries of the Loan Documents or with the consummation of the transactions
contemplated thereby; and
(u) all other documents and legal matters in connection with the
transactions contemplated by this Agreement shall have been delivered, executed,
or recorded and shall be in form and substance satisfactory to Lender.
3.2 CONDITIONS SUBSEQUENT TO THE INITIAL EXTENSION OF CREDIT. The
obligation of Lender to continue to make Advances (or otherwise extend credit
hereunder) is subject to the fulfillment, on or before the date applicable
thereto, of each of the conditions subsequent set forth below (the failure by
Borrower to so perform or cause to be performed constituting an Event of
Default):
(a) within 10 days of the Closing Date, Lender shall have
received a Cash Management Agreement with respect to the Concentration Account;
(b) within 10 days of the Closing Date, Lender shall have
received a Control Agreement for any Securities Account or any Deposit Account
of Borrower of any of its Subsidiaries that contains cash, Cash Equivalents,
deposit account balances, or Investment Property in an aggregate amount in
excess of $100,000 outstanding as of such date;
(c) within 10 days of the Closing Date, Lender shall have
received the Credit Card Agreements, in form and substance satisfactory to
Lender, duly executed, and in full force and effect,
(d) within the earlier of (i) 10 days from the date of the making
of the initial Advance (or other extension of credit) hereunder, and (ii) 15
days from the Closing Date, Lender shall have received the Mortgage on that
certain Real Property owned by Xxxxxx'x of Chicago/Jacksonville LLC commonly
known as 0000 Xxxxxxxxxx Xxxxxxxxx, Xxxxxxxxxxxx, XX, 00000, in form and
substance satisfactory to Lender, duly executed, and in full force and effect;
(e) within the earlier of (i) 10 days from the date of the making
of the initial Advance (or other extension of credit) hereunder, and (ii) 15
days from the Closing Date, Lender shall have received a mortgagee title
insurance policy (or marked commitment to issue the same) for the Real Property
Collateral issued by a title insurance company satisfactory to Lender (each a
"MORTGAGE POLICY" and, collectively, the "MORTGAGE POLICIES") in amounts
reasonably satisfactory to Lender up to 125% of the appraised value of such Real
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Property Collateral assuring Lender that the Mortgage on such Real Property
Collateral is a valid and enforceable first priority mortgage Lien on such Real
Property Collateral free and clear of all defects and encumbrances except
Permitted Liens, and such Mortgage Policy otherwise shall be in form and
substance reasonably satisfactory to Lender;
(f) within 30 days of the Closing Date, Lender shall have
received certified copies of the policies of insurance, together with the
endorsements thereto, as are required by SECTION 6.8, the form and substance of
which shall be satisfactory to Lender and its counsel;
(g) within 30 days of the Closing Date, Lender shall have
received searches reflecting the filing of all financing statements described in
SECTION 3.1(b);
(h) within the time specified in SCHEDULE 3.2(h), each of the
conditions subsequent set forth in SCHEDULE 3.2(h) shall be fulfilled.
3.3 CONDITIONS PRECEDENT TO ALL EXTENSIONS OF CREDIT. The obligation of
Lender to make any Advances hereunder at any time (or to extend any other credit
hereunder) shall be subject to the following conditions precedent:
(a) the representations and warranties contained in this
Agreement and the other Loan Documents shall be true and correct in all material
respects on and as of the date of such extension of credit, as though made on
and as of such date (except to the extent that such representations and
warranties relate solely to an earlier date);
(b) no Default or Event of Default shall have occurred and be
continuing on the date of such extension of credit, nor shall either result from
the making thereof; and
(c) no injunction, writ, restraining order, or other order of any
nature restricting or prohibiting, directly or indirectly, the extending of such
credit shall have been issued and remain in force by any Governmental Authority
against Borrower, Lender or any of their Affiliates; and
(d) no Material Adverse Change shall have occurred.
3.4 TERM. This Agreement shall continue in full force and effect for a term
ending on July 7, 2007 (the "MATURITY DATE"). The foregoing notwithstanding,
Lender shall have the right to terminate its obligations under this Agreement
immediately and without notice upon the occurrence and during the continuation
of an Event of Default.
3.5 EFFECT OF TERMINATION. On the date of termination of this Agreement,
all Obligations (including contingent reimbursement obligations of Borrower with
respect to outstanding Letters of Credit and including all Bank Products
Obligations) immediately shall
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become due and payable without notice or demand (including (a) either (i)
providing cash collateral to be held by Lender in an amount equal to 105% of the
then extant Letter of Credit Usage (which shall be returned to Borrower upon the
expiration of each Letter of Credit without draw), or (ii) causing the original
Letters of Credit to be returned to Lender, and (b) providing cash collateral
(in an amount determined by Lender as sufficient to satisfy the reasonably
estimated credit exposure) to be held by Lender for the benefit of the Bank
Product Providers with respect to the then extant Bank Products Obligations). No
termination of this Agreement, however, shall relieve or discharge Borrower or
its Subsidiaries of their duties, Obligations, or covenants hereunder and the
Lender's Liens in the Collateral shall remain in effect until all Obligations
have been paid in full and Lender's obligations to provide additional credit
hereunder have been terminated. When this Agreement has been terminated and all
of the Obligations have been paid in full and Lender's obligations to provide
additional credit under the Loan Documents have been terminated, Lender will, at
Borrower's sole expense, execute and deliver any UCC termination statements,
lien releases, mortgage releases, re-assignments of trademarks, discharges of
security interests, and other similar discharge or release documents (and, if
applicable, in recordable form) as are necessary or requested by Borrower to
release, as of record, the Lender's Liens and all notices of security interests
and liens previously filed by Lender with respect to the Obligations.
3.6 EARLY TERMINATION BY BORROWER. Borrower has the option, at any time
upon 30 Business Days prior written notice to Lender, to terminate this
Agreement by paying to Lender, in cash, the Obligations (including (a) either
(i) providing cash collateral to be held by Lender in an amount equal to 105% of
the then extant Letter of Credit Usage, or (ii) causing the original Letters of
Credit to be returned to Lender, and (b) providing cash collateral (in an amount
determined by Lender as sufficient to satisfy the reasonably estimated credit
exposure) to be held by Lender for the benefit of the Bank Product Providers
with respect to the then extant Bank Products Obligations), in full, together
with the Applicable Prepayment Premium. If Borrower has sent a notice of
termination pursuant to the provisions of this Section, then Lender's
obligations to extend credit hereunder shall terminate and Borrower shall be
obligated to repay the Obligations (including (a) either (i) providing cash
collateral to be held by Lender in an amount equal to 105% of the then extant
Letter of Credit Usage, or (ii) causing the original Letters of Credit to be
returned to Lender, and (b) providing cash collateral (in an amount determined
by Lender as sufficient to satisfy the reasonably estimated credit exposure) to
be held by Lender for the benefit of the Bank Product Providers with respect to
the then extant Bank Products Obligations), in full, together with the
Applicable Prepayment Premium, on the date set forth as the date of termination
of this Agreement in such notice. In the event of the termination of this
Agreement and repayment of the Obligations at any time prior to the Maturity
Date, for any other reason, including (a) termination upon the election of the
Lender to terminate after the occurrence and during the continuation of an Event
of Default, (b) foreclosure and sale of Collateral, (c) sale of the Collateral
in any Insolvency Proceeding, or (d) restructure, reorganization, or compromise
of the Obligations by the confirmation of a plan of
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reorganization or any other plan of compromise, restructure, or arrangement in
any Insolvency Proceeding, then, in view of the impracticability and extreme
difficulty of ascertaining the actual amount of damages to the Lender or profits
lost by the Lender as a result of such early termination, and by mutual
agreement of the parties as to a reasonable estimation and calculation of the
lost profits or damages of the Lender, Borrower shall pay the Applicable
Prepayment Premium to Lender, measured as of the date of such termination.
4. CREATION OF SECURITY INTEREST.
4.1 GRANT OF SECURITY INTEREST. Borrower hereby grants to Lender for the
benefit of Lender and the Bank Product Providers a continuing security interest
in all of its right, title, and interest in all currently existing and hereafter
acquired or arising Borrower Collateral in order to secure prompt repayment of
any and all of the Obligations in accordance with the terms and conditions of
the Loan Documents and in order to secure prompt performance by Borrower of each
of its covenants and duties under the Loan Documents. The Lender's Liens in and
to the Borrower Collateral shall attach to all Borrower Collateral without
further act on the part of Lender or Borrower. Anything contained in this
Agreement or any other Loan Document to the contrary notwithstanding, except for
Permitted Dispositions, Borrower and its Subsidiaries have no authority, express
or implied, to dispose of any item or portion of the Collateral.
4.2 NEGOTIABLE COLLATERAL. In the event that any Borrower Collateral,
including proceeds, is evidenced by or consists of Negotiable Collateral, and if
and to the extent that Lender determines that perfection or priority of Lender's
security interest is dependent on or enhanced by possession, Borrower, upon the
request of Lender, shall endorse and deliver physical possession of such
Negotiable Collateral to Lender.
4.3 COLLECTION OF ACCOUNTS, GENERAL INTANGIBLES, AND NEGOTIABLE
COLLATERAL. At any time after the occurrence and during the continuation of an
Event of Default, Lender or Lender's designee may (a) notify Account Debtors of
Borrower or of any Domestic Subsidiary that the Accounts, chattel paper, or
General Intangibles of Borrower or any such Subsidiary have been assigned to
Lender or that Lender has a security interest therein, or (b) collect such
Accounts, chattel paper, or General Intangibles directly and charge the
collection costs and expenses to the Loan Account. Borrower and its Domestic
Subsidiaries each agree that each will hold in trust for the Lender, as the
Lender's trustee, any of its Collections that it receives and immediately will
deliver such Collections to Lender or a Cash Management Bank in their original
form as received by Borrower or such Subsidiary.
4.4 FILING OF FINANCING STATEMENTS; COMMERCIAL TORT CLAIMS; DELIVERY OF
ADDITIONAL DOCUMENTATION REQUIRED.
(a) Borrower authorizes Lender to file any financing statement
necessary or desirable to effectuate the transactions contemplated by the Loan
Documents, and any continuation statement or amendment with respect thereto, in
any appropriate filing
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office without the signature of Borrower where permitted by applicable law.
Borrower hereby ratifies the filing of any financing statement filed without the
signature of Borrower prior to the date hereof.
(b) If Borrower or the Guarantors acquire any commercial tort
claim after the date hereof, Borrower shall promptly (but in any event within 3
Business Days after such acquisition) deliver to Lender a written description of
such commercial tort claim and shall deliver a written agreement, in form and
substance reasonably satisfactory to Lender, pursuant to which Borrower or such
Guarantor, as applicable, shall pledge and collaterally assign all of its right,
title and interest in and to such commercial tort claim to Lender, as security
for the Obligations (a "Commercial Tort Claim Assignment").
(c) At any time upon the request of Lender, Borrower shall
execute or deliver to Lender, and shall cause the Guarantors to execute or
deliver to Lender, any and all financing statements, original financing
statements in lieu of continuation statements, fixture filings, security
agreements, pledges, assignments, Commercial Tort Claim Assignments,
endorsements of certificates of title, and all other documents (collectively,
the "ADDITIONAL DOCUMENTS") that Lender may request in its Permitted Discretion,
in form and substance reasonably satisfactory to Lender, to create, perfect and
continue perfected or to better perfect the Lender's Liens in the assets (other
than the Excluded Assets) of Borrower and the Guarantors (whether now owned or
hereafter arising or acquired, tangible or intangible, real or personal), to
create and perfect Liens in favor of Lender in any Real Property owned in fee
(other than the Excluded Assets) acquired after the Closing Date and having a
purchase price equal to or greater than $1,000,000 individually (or up to
$2,500,000 million for all such fee owned Real Property in the aggregate) and in
order to fully consummate all of the transactions contemplated hereby and under
the other Loan Documents. To the maximum extent permitted by applicable law,
Borrower authorizes Lender to execute any such Additional Documents in
Borrower's name and authorizes Lender to file such executed Additional Documents
in any appropriate filing office if any Debtor refuses to, or fails timely to,
execute and deliver any Additional Document. In addition, on such periodic basis
as Lender shall require, Borrower shall (i) provide Lender with a report of all
new material patentable, copyrightable, or trademarkable materials acquired or
generated by Borrower or the Guarantors during the prior period, (ii) cause all
material patents, copyrights, and trademarks acquired or generated by Borrower
or the Guarantors that are not already the subject of a registration with the
appropriate filing office (or an application therefor diligently prosecuted) to
be registered with such appropriate filing office in a manner sufficient to
impart constructive notice of Borrower's or the applicable Subsidiary's
ownership thereof, and (iii) cause to be prepared, executed, and delivered to
Lender supplemental schedules to the applicable Loan Documents to identify such
patents, copyrights, and trademarks as being subject to the security interests
created thereunder.
4.5 POWER OF ATTORNEY. Borrower hereby irrevocably makes, constitutes, and
appoints Lender (and any of Lender's officers, employees, or agents designated
by Lender)
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as Borrower's true and lawful attorney, with power to (a) if Borrower refuses
to, or fails timely to execute and deliver any of the documents described in
SECTION 4.4, sign the name of Borrower on any of the documents described in
SECTION 4.4, (b) at any time that an Event of Default has occurred and is
continuing and after notice to Borrower, sign Borrower's name on any invoice or
xxxx of lading relating to the Borrower Collateral, drafts against Account
Debtors, or notices to Account Debtors, (c) send requests for verification of
Borrower's or any Guarantor's Accounts, (d) endorse Borrower's name on any of
its payment items (including all of its Collections) that may come into Lender's
possession, (e) at any time that an Event of Default has occurred and is
continuing, make, settle, and adjust all claims under Borrower's policies of
insurance and make all determinations and decisions with respect to such
policies of insurance, and (f) at any time that an Event of Default has occurred
and is continuing, settle and adjust disputes and claims respecting Borrower's
or Guarantors' Accounts, chattel paper, or General Intangibles directly with
Account Debtors, for amounts and upon terms that Lender determines to be
reasonable, and Lender may cause to be executed and delivered any documents and
releases that Lender determines to be necessary. The appointment of Lender as
Borrower's attorney, and each and every one of its rights and powers, being
coupled with an interest, is irrevocable until all of the Obligations have been
fully and finally repaid and performed and Lender's obligations to extend credit
hereunder are terminated.
4.6 RIGHT TO INSPECT. Lender and its officers, employees, or agents shall
have the right, from time to time hereafter during normal business hours, or at
any time following the occurrence and during the continuance of a Default or an
Event of Default, to inspect the Books and make copies or abstracts thereof and
to check, test, and appraise the Collateral, or any portion thereof, in order to
verify Borrower's and its Guarantors' financial condition or the amount,
quality, value, condition of, or any other matter relating to, the Collateral.
4.7 CONTROL AGREEMENTS. Borrower agrees that it will not, and will not
permit the Guarantors to, transfer assets out of any of their Deposit Accounts
or Securities Accounts; provided, however, that so long as no Event of Default
has occurred and is continuing or would result therefrom, Borrower and the
Guarantors may use such assets (and the proceeds thereof) to the extent not
prohibited by this Agreement or the other Loan Documents and, if the transfer is
to another bank or securities intermediary, so long as Borrower or its
Subsidiary, Lender, and the substitute bank or securities intermediary have
entered into a Control Agreement. Borrower agrees that it will and will cause
its Subsidiaries to comply with SECTION 2.7(c) and take any or all reasonable
steps that Lender requests in order for Lender to obtain control in accordance
with Sections 9-104, 9-105, 9-106, and 9-107 of the Code with respect to any of
its or their electronic chattel paper, Investment Property, and letter-of-credit
rights. No arrangement contemplated hereby or by any Control Agreement in
respect of any Securities Accounts or other Investment Property shall be
modified by Borrower without the prior written consent of Lender. Upon the
occurrence and during the continuance of a Default or Event of Default, Lender
may notify any bank or securities intermediary to liquidate the applicable
Deposit Account or Securities Account or any related
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Investment Property maintained or held thereby and remit the proceeds thereof to
the Lender's Account.
5. REPRESENTATIONS AND WARRANTIES.
In order to induce Lender to enter into this Agreement, Borrower makes
the following representations and warranties to Lender which shall be true,
correct, and complete, in all material respects, as of the date hereof, and
shall be true, correct, and complete, in all material respects, as of the
Closing Date, and at and as of the date of the making of each Advance (or other
extension of credit) made thereafter, as though made on and as of the date of
such Advance (or other extension of credit) (except to the extent that such
representations and warranties relate solely to an earlier date) and such
representations and warranties shall survive the execution and delivery of this
Agreement:
5.1 NO ENCUMBRANCES. Borrower and Guarantors have good title to their
personal property assets and good and marketable title to their Real Property,
in each case, free and clear of Liens except for Permitted Liens.
5.2 [INTENTIONALLY OMITTED].
5.3 [INTENTIONALLY OMITTED].
5.4 EQUIPMENT. All of the Equipment of Borrower and Guarantors is used or
held for use in their business and to the extent necessary for the operation of
their business, is fit for such purposes.
5.5 LOCATION OF INVENTORY AND EQUIPMENT. Except as set forth on SCHEDULE
5.5, the Inventory and Equipment of Borrower and Guarantors are not stored with
a bailee, warehouseman, or similar party and are located only at, or in-transit
between, the locations identified on SCHEDULE 5.5 (as such Schedule may be
updated pursuant to Section 6.9).
5.6 INVENTORY RECORDS. Borrower keeps correct and accurate records
itemizing and describing the type, quality, and quantity of its and its
Subsidiaries' Inventory and the book value thereof other than any Inventory that
may be owned by an Inactive Subsidiaries.
5.7 STATE OF INCORPORATION; LOCATION OF CHIEF EXECUTIVE OFFICE; FEIN;
ORGANIZATIONAL ID NUMBER; COMMERCIAL TORT CLAIMS.
(a) The jurisdiction of organization of Borrower and each of its
Subsidiaries is set forth on SCHEDULE 5.7(a).
(b) The chief executive office of Borrower and each of its
Domestic Subsidiaries is located at the address indicated on SCHEDULE 5.7 (b)
(as such Schedule may be updated pursuant to Section 6.9).
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(c) Borrower's and each of its Domestic Subsidiaries' FEIN and
organizational identification number, if any, are identified on SCHEDULE 5.7(c).
(d) As of the Closing Date, Borrower and its Domestic
Subsidiaries do not hold any commercial tort claims, except as set forth on
SCHEDULE 5.7(d).
5.8 DUE ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) Borrower is duly organized and existing and in good standing
under the laws of the jurisdiction of its organization and qualified to do
business in any state where the failure to be so qualified reasonably could be
expected to have a Material Adverse Change.
(b) Set forth on SCHEDULE 5.8(b), is a complete and accurate
description of the authorized capital Stock of Borrower, by class, and, as of
the Closing Date, a description of the number of shares of each such class that
are issued and outstanding. Other than as described on SCHEDULE 5.8(b), there
are no subscriptions, options, warrants, or calls relating to any shares of
Borrower's capital Stock, including any right of conversion or exchange under
any outstanding security or other instrument. Except as described on SCHEDULE
5.8(b), Borrower is not subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any shares of its capital Stock or any
security convertible into or exchangeable for any of its capital Stock.
(c) Set forth on SCHEDULE 5.8(c), is a complete and accurate list
of Borrower's direct and indirect Subsidiaries, showing: (i) the jurisdiction of
their organization, (ii) the number of shares of each class of common and
preferred Stock authorized for each of such Subsidiaries, and (iii) the number
and the percentage of the outstanding shares of each such class owned directly
or indirectly by Borrower. All of the outstanding capital Stock of each such
Subsidiary has been validly issued and is fully paid and non-assessable.
(d) Except as set forth on SCHEDULE 5.8(c), there are no
subscriptions, options, warrants, or calls relating to any shares of Borrower's
Subsidiaries' capital Stock, including any right of conversion or exchange under
any outstanding security or other instrument. Neither Borrower nor any of its
Domestic Subsidiaries is subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any shares of such Subsidiary's
capital Stock or any security convertible into or exchangeable for any such
capital Stock.
5.9 DUE AUTHORIZATION; NO CONFLICT.
(a) The execution, delivery, and performance by Borrower of this
Agreement and the other Loan Documents to which it is a party have been duly
authorized by all necessary action on the part of Borrower.
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(b) The execution, delivery, and performance by Borrower of this
Agreement and the other Loan Documents to which it is a party do not and will
not (i) violate any provision of federal, state, or local law or regulation
applicable to Borrower, the Governing Documents of Borrower, or any order,
judgment, or decree of any court or other Governmental Authority binding on
Borrower, (ii) conflict with, result in a breach of, or constitute (with due
notice or lapse of time or both) a default under any contractual obligation of
Borrower that could reasonably be expected to result in a Material Adverse
Change, (iii) result in or require the creation or imposition of any Lien of any
nature whatsoever upon any properties or assets of Borrower, other than
Permitted Liens, or (iv) require any approval of Borrower's interestholders or
any approval or consent of any Person under any material contractual obligation
of Borrower, other than consents or approvals that have been obtained and that
are still in force and effect.
(c) Other than the filing of financing statements and filings
with the United States Patent & Trademark Office, and the recordation of the
Mortgages, the execution, delivery, and performance by Borrower of this
Agreement and the other Loan Documents to which Borrower is a party do not and
will not require any registration with, consent, or approval of, or notice to,
or other action with or by, any Governmental Authority other than consents or
approvals that have been obtained and that are still in force and effect.
(d) This Agreement and the other Loan Documents to which Borrower
is a party, and all other documents contemplated hereby and thereby, when
executed and delivered by Borrower will be the legally valid and binding
obligations of Borrower, enforceable against Borrower in accordance with their
respective terms, except as enforcement may be limited by equitable principles
or by bankruptcy, insolvency, reorganization, moratorium, or similar laws
relating to or limiting creditors' rights generally.
(e) On and after the Closing Date, The Lender's Liens are validly
created, perfected, and first priority Liens, subject only to Permitted Liens.
(f) The execution, delivery, and performance by each Guarantor of
the Loan Documents to which it is a party have been duly authorized by all
necessary action on the part of such Guarantor.
(g) The execution, delivery, and performance by each Guarantor of
the Loan Documents to which it is a party do not and will not (i) violate any
provision of federal, state, or local law or regulation applicable to such
Guarantor, the Governing Documents of such Guarantor, or any order, judgment, or
decree of any court or other Governmental Authority binding on such Guarantor,
(ii) conflict with, result in a breach of, or constitute (with due notice or
lapse of time or both) a default under any contractual obligation of such
Guarantor that could reasonably be expected to result in a Material Adverse
Change, (iii) result in or require the creation or imposition of any Lien of any
nature whatsoever upon any properties or assets of such Guarantor, other than
Permitted Liens, or (iv) require any approval of such Guarantor's
interestholders or any approval or consent of any Person under
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any material contractual obligation of such Guarantor, other than consents or
approvals that have been obtained and that are still in force and effect.
(h) Other than the filing of financing statements, filings with
the United States Patent & Trademark Office, and the recordation of the
Mortgages, the execution, delivery, and performance by each Guarantor of the
Loan Documents to which such Guarantor is a party do not and will not require
any registration with, consent, or approval of, or notice to, or other action
with or by, any Governmental Authority other than consents or approvals that
have been obtained and that are still in force and effect.
(i) The Loan Documents to which each Guarantor is a party, and
all other documents contemplated hereby and thereby, when executed and delivered
by such Guarantor will be the legally valid and binding obligations of such
Guarantor, enforceable against such Guarantor in accordance with their
respective terms, except as enforcement may be limited by equitable principles
or by bankruptcy, insolvency, reorganization, moratorium, or similar laws
relating to or limiting creditors' rights generally.
5.10 LITIGATION. Other than those matters disclosed on SCHEDULE 5.10,
there are no actions, suits, or proceedings pending or, to the best knowledge of
Borrower, threatened against Borrower, or any Guarantor, as applicable, except
for (a) matters that are fully covered by insurance (subject to customary
deductibles), and (b) matters arising after the Closing Date that, if decided
adversely to Borrower, or any Guarantor, as applicable, reasonably could not be
expected to result in a Material Adverse Change.
5.11 NO MATERIAL ADVERSE CHANGE. All financial statements relating to
Borrower and its Subsidiaries or Guarantors that have been delivered by Borrower
to Lender have been prepared in accordance with GAAP (except, in the case of
unaudited financial statements, for the lack of footnotes and being subject to
year-end audit adjustments) and present fairly in all material respects,
Borrower's and its Subsidiaries' financial condition as of the date thereof and
results of operations for the period then ended. There has not been a Material
Adverse Change with respect to Borrower and its Subsidiaries (or Guarantors, as
applicable) since the date of the latest financial statements submitted to
Lender on or before the Closing Date.
5.12 FRAUDULENT TRANSFER.
(a) Borrower is and the Borrower's Domestic Subsidiaries taken as
a whole are Solvent.
(b) No transfer of property is being made by Borrower or
Guarantors and no obligation is being incurred by Borrower or Guarantors in
connection with the transactions contemplated by this Agreement or the other
Loan Documents with the intent to hinder, delay, or defraud either present or
future creditors of Borrower or Guarantors.
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5.13 EMPLOYEE BENEFITS. Except as set forth on SCHEDULE 5.13, None of
Borrower, any of its Subsidiaries, or any of their ERISA Affiliates maintains or
contributes to any Benefit Plan.
5.14 ENVIRONMENTAL CONDITION. Except as set forth on SCHEDULE 5.14, (a) to
Borrower's knowledge, none of Borrower's or its Subsidiaries' assets has ever
been used by Borrower, its Subsidiaries, or by previous owners or operators in
the disposal of, or to produce, store, handle, treat, release, or transport, any
Hazardous Materials, where such production, storage, handling, treatment,
release or transport was in violation, in any material respect, of applicable
Environmental Law, (b) to Borrower's knowledge, none of Borrower's or its
Subsidiaries' properties or assets has ever been designated or identified in any
manner pursuant to any Environmental Law as a Hazardous Materials disposal site,
(c) neither Borrower nor any of its Subsidiaries has received notice that a Lien
arising under any Environmental Law has attached to any revenues or to any Real
Property owned or operated by Borrower or its Subsidiaries, and (d) except for
matters reduced or remediated to the written satisfaction of the applicable
Governmental Authority neither Borrower nor its Subsidiaries has received a
summons, citation, notice, or directive from the Environmental Protection Agency
or any other federal or state governmental agency concerning any action or
omission by Borrower or its Subsidiaries resulting in the releasing or disposing
of Hazardous Materials into the environment in violation of any applicable
Environmental Laws.
5.15 BROKERAGE FEES. Neither Borrower nor any of its Subsidiaries has
utilized the services of any broker or finder in connection with Borrower's
obtaining financing from Lender under this Agreement and no brokerage commission
or finders fee is payable by Borrower or its Subsidiaries in connection
herewith.
5.16 INTELLECTUAL PROPERTY. Borrower and Guarantors own, or hold licenses
to use, all Intellectual Property that is necessary to or used in the conduct of
Borrower's and Guarantors' businesses as currently conducted Attached hereto as
SCHEDULE 5.16 (as updated from time to time) is a true, correct, and complete
listing of all Intellectual Property for which Borrower or any Subsidiary of
Borrower is the owner or an exclusive licensee and of all license agreements
under which any Person other than Borrower is the exclusive licensee thereof.
Except as set forth on SCHEDULE 5.16, neither Borrower nor any Subsidiary of
Borrower owns or licenses (whether as licensee or licensor) any Intellectual
Property.
5.17 LEASES. Except as set forth on SCHEDULE 5.17, Borrower and its
Subsidiaries (other than Inactive Subsidiaries) enjoy peaceful and undisturbed
possession under all leases material to their business and to which they are
parties or under which they are operating subject to Permitted Protests. Except
as set forth on SCHEDULE 5.17, all of such leases are valid and subsisting and
no material default by Borrower or its Subsidiaries (other than Inactive
Subsidiaries) exists under any of them subject to Permitted Protests.
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5.18 DEPOSIT ACCOUNTS AND SECURITIES ACCOUNTS. Set forth on SCHEDULE 5.18
are all of Borrower's and its Subsidiaries Deposit Accounts and Securities
Accounts, including, with respect to each bank or securities intermediary (i)
the name and address of such Person, and (ii) the account numbers of the Deposit
Accounts or Securities Accounts maintained with such Person.
5.19 COMPLETE DISCLOSURE. All factual information (taken as a whole)
furnished by or on behalf of Borrower or its Subsidiaries in writing to Lender
(including all information contained in the Schedules hereto or in the other
Loan Documents) for purposes of or in connection with this Agreement, the other
Loan Documents, or any transaction contemplated herein or therein is, and all
other such factual information (taken as a whole) hereafter furnished by or on
behalf of Borrower or its Subsidiaries in writing to Lender will be, true and
accurate, in all material respects, on the date as of which such information is
dated or certified and not incomplete by omitting to state any fact necessary to
make such information (taken as a whole) not misleading in any material respect
at such time in light of the circumstances under which such information was
provided. On the Closing Date, the Closing Date Projections represent, and as of
the date on which any other Projections are delivered to Lender, such additional
Projections represent Borrower's good faith best estimate of its and its
Subsidiaries future, performance for the periods covered thereby (using
assumptions believed in good faith to be reasonable at such time).
5.20 INDEBTEDNESS. Set forth on SCHEDULE 5.20 is a true and complete list
of all Indebtedness of Borrower and its Subsidiaries outstanding immediately
prior to the Closing Date that is to remain outstanding after the Closing Date
and such Schedule accurately reflects the aggregate principal amount of such
Indebtedness and the principal terms thereof.
5.21 REAL PROPERTY. SCHEDULE 5.21 sets forth a complete and accurate list,
as of the Closing Date, of the location, by state and street address, of all
Real Property of Borrower and each Guarantor, including all Restaurants. As of
the Closing Date, each of Borrower and each of Guarantor, as indicated on
SCHEDULE 5.21, has valid leasehold interests in the Real Property described on
SCHEDULE 5.21 as a leasehold interest, and each has a fully executed and
currently effective lease relative to such leasehold interest. Each such lease
is valid and enforceable in accordance with its terms in all material respects
and is in full force and effect. No consent or approval of any landlord or other
third party in connection with any such lease is necessary for any Borrower or
any of its Subsidiaries to enter into, execute and deliver, or perform its
obligations under the Loan Documents to which it is a party, except as set forth
on SCHEDULE 5.21. Except as set forth on SCHEDULE 5.21 or with respect to
Inactive Subsidiaries as to which neither Borrower nor any of its Subsidiaries
other than Inactive Subsidiaries is liable in whole or in part, primarily,
secondarily, contingently or otherwise, to the best knowledge of Borrower and
its Subsidiaries, (a) no other party to any such lease is in material default of
its obligations thereunder, (b) neither Borrower nor any of its Subsidiaries (or
any other party to any such lease) has at any time delivered or received any
notice of material default which remains uncured under any such lease, and (c)
as of the Closing Date,
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no event has occurred which, with the giving of notice or the passage of time or
both, would constitute a material default under any such lease.
5.22 FRANCHISES. Neither Borrower nor any of its Subsidiaries is a party,
as franchisor or franchisee, to any franchise agreements.
5.23 INACTIVE SUBSIDIARIES. No Inactive Subsidiary engages in any business
activities (other than activities related to winding-up), no Inactive Subsidiary
has any material assets, no Inactive Subsidiary has assets in excess of $100,000
and all Inactive Subsidiaries collectively do not hold or own assets in excess
of $500,000 in the aggregate.
5.24 PARENT'S BUSINESS. Parent's sole business activity is the management
and operation of the Borrower and its Subsidiaries. Parent has no officers or
employees who devote any material time or attention to any business or operation
of any Person other than the Borrower and its Subsidiaries.
5.25 CREDIT CARD RECEIPTS. SCHEDULE 5.25 sets forth all of Borrower's and
each of its Domestic Subsidiary's Credit Card Processors and all arrangements to
which Borrower or any Domestic Subsidiary is a party with respect to the payment
to Borrower or any Domestic Subsidiary of the proceeds of all credit card
charges for sales by Borrower or any of its Domestic Subsidiaries.
6. AFFIRMATIVE COVENANTS.
Borrower covenants and agrees that, so long as any credit hereunder
shall be available and until payment in full of the Obligations (other than
continuing contingent indemnification obligations), Borrower shall and shall
cause each Guarantor to do all of the following:
6.1 ACCOUNTING SYSTEM. Maintain a system of accounting that enables
Borrower to produce financial statements in accordance with GAAP and maintain
records pertaining to the Collateral that contain information as from time to
time reasonably may be requested by Lender. Borrower also shall keep an
inventory reporting system that shows all additions, sales, claims, returns, and
allowances with respect to its and the Guarantors' Inventory.
6.2 COLLATERAL REPORTING. Provide Lender with the following documents at
the following times in form satisfactory to Lender:
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Monthly (not later than (a) a detailed calculation of the Borrowing Base,
the 25th day of each
month in which the (b) sales reports for each currently operating
Advances have exceeded Restaurant of each Obligor, for the prior month,
$7.5 million outstanding
at any time and not (c) a summary aging, by vendor, of Borrower's and its
later than 30th day of Subsidiaries' accounts payable and any book
each month in which the overdraft,
Advances have not
exceeded $7.5 million (d) a detailed report regarding Borrower and its
outstanding at any time) Subsidiaries' cash and Cash Equivalents including an
indication of which amounts constitute Qualified
Cash; and
(e) a copy of the monthly reporting package delivered
by Borrower or Parent to its Board of Directors.
Quarterly (f) a report regarding Borrower's and its
Subsidiaries' accrued, but unpaid, AD VALOREM, Real
Property, sales, and payroll taxes,
(g) a report on each of the Restaurants, together
with a listing of any new Restaurants or locations
owned, leased or franchised by Borrower or any of its
Subsidiaries, and a reconciliation explaining any
change (whether due to a Permitted Disposition or
otherwise) in the ownership or operation of the
Restaurants and locations listed in the corresponding
report for the immediately preceding quarter.
Upon reasonable request (h) such other reports as to the Collateral or the
by Lender financial condition of Borrower and its Subsidiaries
as Lender may request.
6.3 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES. Deliver to Lender:
(a) as soon as available, but in any event within 30 days (45
days in the case of a month that is the end of one of Borrower's fiscal
quarters) after the end of each month during each of Borrower's fiscal years,
(i) a company prepared consolidated balance sheet, income
statement, and statement of cash flow covering Borrower's and its
Subsidiaries' operations during such period,
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(ii) a certificate signed by the chief financial officer of
Borrower to the effect that:
(A) the financial statements delivered hereunder have been
prepared in accordance with GAAP (except for the lack of
footnotes and being subject to year-end audit adjustments) and
fairly present in all material respects the financial condition
of Borrower and its Subsidiaries,
(B) if at any time the Revolver Usage is greater than or
equal to $5,000,000, the representations and warranties of
Borrower contained in this Agreement and the other Loan Documents
are true and correct in all material respects on and as of the
date of such certificate, as though made on and as of such date
(except to the extent that such representations and warranties
relate solely to an earlier date), and
(C) there does not exist any condition or event that
constitutes a Default or Event of Default (or, to the extent of
any non-compliance, describing such non-compliance as to which he
or she may have knowledge and what action Borrower has taken, is
taking, or proposes to take with respect thereto), and
(iii) for each month that is the date on which the financial
covenant in SECTION 7.18 is to be tested, a Compliance Certificate
demonstrating, in reasonable detail, compliance at the end of such
period with such financial covenant contained in SECTION 7.18,
(b) as soon as available, but in any event within 45 days after
the end of each quarter during each of Borrower's fiscal years,
(i) if at any time the Revolver Usage is greater than $0 but
less than $5,000,000, a certificate signed by the chief financial
officer of Borrower to the effect that the representations and
warranties of Borrower contained in this Agreement and the other Loan
Documents are true and correct in all material respects on and as of
the date of such certificate, as though made on and as of such date
(except to the extent that such representations and warranties relate
solely to an earlier date), and
(c) as soon as available, but in any event within 90 days after
the end of each of Borrower's fiscal years,
(i) consolidated financial statements of Borrower and its
Subsidiaries for each such fiscal year, audited by independent
certified public accountants reasonably acceptable to Lender and
certified, without any
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material qualifications, by such accountants to have been prepared in
accordance with GAAP (such audited financial statements to include a
balance sheet, income statement, and statement of cash flow and, if
prepared, such accountants' letter to management), and
(ii) a certificate of such accountants addressed to Lender
stating that such accountants do not have knowledge of the existence
of any Default or Event of Default under SECTION 7.18,
(d) as soon as available, but in any event within 30 days after
the start of each of Borrower's fiscal years, copies of Borrower's Projections,
in form and substance (including as to scope and underlying assumptions)
reasonably satisfactory to Lender, in its Permitted Discretion, for the
forthcoming 3 years, year by year, and for the forthcoming fiscal year, month by
month, certified by the chief financial officer of Borrower as being such
officer's good faith best estimate of the financial performance of Borrower
during the period covered thereby,
(e) if and when filed by Borrower,
(i) Form 10-Q quarterly reports, Form 10-K annual reports, and
Form 8-K current reports,
(ii) any other filings made by Borrower with the SEC,
(f) if and when filed by Borrower or its Subsidiaries and as
requested by Lender, satisfactory evidence of payment of applicable excise taxes
in each jurisdiction in which (i) Borrower or its Subsidiaries (other than
Inactive Subsidiaries for whose taxes neither Borrower nor any of Domestic
Subsidiary is liable) conducts business or is required to pay any such excise
tax; (ii) where Borrower's or any Domestic Subsidiary's (other than Inactive
Subsidiaries for whose taxes neither Borrower nor any of Domestic Subsidiary is
liable) failure to pay any such applicable excise tax would result in a Lien on
the properties or assets of Borrower or its Subsidiaries, or (iii) where
Borrower's or its Subsidiaries' (other than Inactive Subsidiaries for whose
taxes neither Borrower nor any of Domestic Subsidiary is liable) failure to pay
any such applicable excise tax reasonably could be expected to result in a
Material Adverse Change,
(g) as soon as Borrower has knowledge of any event or condition
that constitutes a Default or an Event of Default, notice thereof and a
statement of the curative action that Borrower proposes to take with respect
thereto,
(h) promptly after the commencement thereof, but in any event
within 5 days after the service of process with respect thereto on Borrower or
any of its Subsidiaries (other than Inactive Subsidiaries for whose actions
neither Borrower nor any of Domestic Subsidiary is liable), notice of all
actions, suits, or proceedings brought by or against
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Borrower or any of its Subsidiaries (other than Inactive Subsidiaries for whose
actions neither Borrower nor any of Domestic Subsidiary is liable)before any
Governmental Authority which, if determined adversely to Borrower or such
Subsidiary, reasonably could be expected to result in a Material Adverse Change,
and
(h) upon the reasonable request of Lender, any other report,
filing or information reasonably requested relating to the financial condition
of Borrower or its Subsidiaries.
In addition to the financial statements referred to in clauses (a) and
(b) above, Borrower agrees to deliver to Lender, concurrently with the delivery
of the financial statements referred to in clause (a) above, income statements
relating to its Subsidiaries (other than Inactive Subsidiaries) for the relevant
monthly period, on a consolidating basis substantially in the form of the
consolidating income statements delivered by Borrower to Lender prior to the
Closing Date. Borrower agrees that no Subsidiary of Borrower will have a fiscal
year different from that of Borrower. Borrower agrees to cooperate with Lender
to allow Lender to consult with its independent certified public accountants if
Lender reasonably requests the right to do so (so long as, prior to the
occurrence and continuation of an Event of Default, a representative of such
Borrower is present) and that, in such connection, its independent certified
public accountants are authorized to communicate with Lender and to release to
Lender whatever financial information concerning Borrower Lender reasonably may
request.
6.4 GUARANTOR REPORTS. Cause each Guarantor to deliver its annual financial
statements at the time when Borrower provides its audited financial statements
to Lender, but only to the extent such Guarantor's financial statements are not
consolidated with Borrower's financial statements.
6.5 [INTENTIONALLY OMITTED].
6.6 MAINTENANCE OF PROPERTIES. Maintain and preserve all of its properties
which are necessary or useful in the proper conduct to its business in good
working order and condition, ordinary wear and tear casualties and Permitted
Dispositions excepted, and comply at all times with the provisions of all leases
to which it is a party as lessee so as to prevent any material loss or
forfeiture thereof or thereunder, except to the extent such lease is the subject
of a Permitted Disposition.
6.7 TAXES. Cause all assessments and taxes, whether real, personal, or
otherwise, due or payable by, or imposed, levied, or assessed against Borrower,
its Subsidiaries, or any of their respective assets to be paid in full, before
delinquency or before the expiration of any extension period, except to the
extent that the validity of such assessment or tax shall be the subject of a
Permitted Protest. Borrower will and will cause its Subsidiaries to make timely
payment or deposit of all tax payments and withholding taxes required of it and
them by applicable laws, including those laws concerning F.I.C.A., F.U.T.A.,
state disability, and
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local, state, and federal income taxes, and will, upon request, furnish Lender
with proof satisfactory to Lender indicating that Borrower and its Subsidiaries
have made such payments or deposits.
6.8 INSURANCE.
(a) At Borrower's expense, maintain insurance respecting all of
its and its Subsidiaries' (other than the assets of Inactive Subsidiaries)
assets wherever located, covering loss or damage by fire, theft, explosion, and
all other hazards and risks as ordinarily are insured against by other Persons
engaged in the same or similar businesses. Borrower also shall maintain business
interruption, public liability, and product liability insurance, as well as
insurance against larceny, embezzlement, and criminal misappropriation. All such
policies of insurance shall be in such amounts and with such insurance companies
as are customary for Persons engaged in the same or similar businesses of
similar size and quality. Borrower shall deliver copies of all such policies to
Lender with a satisfactory lender's loss payable endorsement naming Lender as
loss payee or additional insured, as appropriate. Each policy of insurance or
endorsement shall contain a clause requiring the insurer to give not less than
30 days prior written notice to Lender in the event of cancellation of the
policy for any reason whatsoever.
(b) Borrower shall give Lender prompt notice of any loss
exceeding $10,000 covered by such insurance. So long as no Event of Default has
occurred and is continuing, Borrower shall have the exclusive right to adjust
any losses claimed after the Closing Date. At any time following the occurrence
and during the continuance of a Default or an Event of Default, Lender shall
have the exclusive right to adjust any losses claimed after the Closing Date
without any liability to Borrower whatsoever in respect of such adjustments.
During the continuance of an Event of Default any monies received as payment for
any loss under any insurance policy mentioned above (other than liability
insurance policies) or as payment of any award or compensation for condemnation
or taking by eminent domain, shall be paid over to Lender to be applied at the
option of Lender either to the prepayment of the Obligations or shall be
disbursed to Borrower under staged payment terms reasonably satisfactory to
Lender for application to the cost of repairs, replacements, or restorations.
Borrower shall utilize any such proceeds to replace, substitute, or restore the
assets lost or taken. Any such repairs, replacements, or restorations shall be
effected with reasonable promptness and shall be of a value at least equal to
the value of the items of property destroyed or taken prior to such damage,
destruction or taking.
(c) Borrower will not and will not suffer or permit any of its
Domestic Subsidiaries to take out separate insurance concurrent in form or
contributing in the event of loss with that required to be maintained under this
SECTION 6.8, unless Lender is included thereon as named insured with the loss
payable to Lender under a lender's loss payable endorsement or its equivalent.
Borrower immediately shall notify Lender whenever such separate insurance is
taken out, specifying the insurer thereunder and full particulars as to the
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policies evidencing the same, and copies of such policies promptly shall be
provided to Lender.
6.9 LOCATION OF INVENTORY AND EQUIPMENT. Keep Borrower's and Guarantors'
Inventory and Equipment only at the locations identified on SCHEDULE 5.5 and
their chief executive offices only at the locations identified on SCHEDULE
5.7(b); PROVIDED, HOWEVER, that Borrower may amend SCHEDULE 5.5 and SCHEDULE 5.7
so long as such amendment occurs by written notice to Lender not less than 15
days prior to the date on which such Inventory or Equipment is moved to such new
location or such chief executive office is relocated so long as such new
location is within the continental United States.
6.10 COMPLIANCE WITH LAWS. Comply with the requirements of all applicable
laws, rules, regulations, and orders of any Governmental Authority, including
the Fair Labor Standards Act and the Americans With Disabilities Act, other than
laws, rules, regulations, and orders the non-compliance with which, individually
or in the aggregate, could not reasonably be expected to result in a Material
Adverse Change.
6.11 LEASES. Pay when due all rents and other amounts payable under any
material leases (provided that all Restaurant leases are deemed material, other
than Restaurant leases for Unprofitable Restaurants or Restaurants otherwise
permitted to be closed pursuant to the definition of the term "Permitted
Dispositions", in each case on which neither Borrower nor any Subsidiary other
than the Subsidiary that owns the Unprofitable Restaurant are liable) to which
Borrower or any of its Domestic Subsidiaries (other than an Inactive Subsidiary)
is a party or by which Borrower's or any such Subsidiary's properties and assets
are bound, unless such payments are the subject of a Permitted Protest.
6.12 EXISTENCE. At all times preserve and keep in full force and effect
Borrower's and Guarantors' valid existence and good standing and any rights and
franchises material to their businesses except to the extent such existence,
good standing rights, or Franchises are the subject of a Permitted Disposition.
6.13 ENVIRONMENTAL.
(a) Keep any property either owned or operated by Borrower or its
Domestic Subsidiaries free of any Environmental Liens or post bonds or other
financial assurances sufficient to satisfy the obligations or liability
evidenced by such Environmental Liens, (b) comply, in all material respects,
with Environmental Laws and provide to Lender documentation of such compliance
which Lender reasonably requests, (c) promptly notify Lender of any release of a
Hazardous Material in any reportable quantity from or onto property owned or
operated by Borrower or its Subsidiaries and, to the extent required by any
applicable Environmental Law, take any Remedial Actions required under such
Environmental Laws to xxxxx said release or otherwise to come into compliance
with applicable Environmental Law, and (d) promptly, but in any event within 10
days of its receipt thereof, provide Lender with written notice of any of the
following: (i) notice that an
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Environmental Lien has been filed against any of the real or personal property
of Borrower or its Subsidiaries, (ii) commencement of any Environmental Action
or notice that an Environmental Action will be filed against Borrower or its
Subsidiaries, and (iii) notice of a violation, citation, or other administrative
order which reasonably could be expected to result in a Material Adverse Change.
6.14 DISCLOSURE UPDATES. Promptly and in no event later than 5 Business
Days after obtaining knowledge thereof, notify Lender if any written
information, exhibit, or report furnished to Lender under any Loan Document
contained any untrue statement of a material fact or omitted to state any
material fact necessary to make the statements contained therein not misleading
in light of the circumstances in which made. The foregoing to the contrary
notwithstanding, any notification pursuant to the foregoing provision will not
cure or remedy the effect of the prior untrue statement of a material fact or
omission of any material fact nor shall any such notification have the affect of
amending or, modifying this Agreement or any of the Schedules hereto.
6.15 FORMATION OF SUBSIDIARIES. At the time that Borrower or any Guarantor
forms any direct or indirect Domestic Subsidiary or acquires any direct or
indirect Domestic Subsidiary after the Closing Date, Borrower or such Guarantor
shall (a) cause such new Domestic Subsidiary to provide to Lender a joinder to
the Guaranty and the Guarantor Security Agreement, together with such other
security documents (including, to the extent required hereunder, Mortgages with
respect to any unencumbered Real Property owned in fee of such new Subsidiary),
as well as appropriate UCC-1 financing statements (and with respect to all
property subject to a Mortgage, fixture filings), all in form and substance
reasonably satisfactory to Lender (including being sufficient to grant Lender a
first priority Lien (subject to Permitted Liens) in and to the assets of such
newly formed or acquired Domestic Subsidiary), (b) provide to Lender a pledge
agreement and appropriate certificates and powers or UCC-1 financing statements,
hypothecating all of the direct or beneficial ownership interest in such new
Domestic Subsidiary, in form and substance satisfactory to Lender, and (c)
provide to Lender all other documentation, including one or more opinions of
counsel satisfactory to Lender, which in its opinion is appropriate with respect
to the execution and delivery of the applicable documentation referred to above
(including policies of title insurance or other documentation with respect to
all property subject to any such Mortgage). Any document, agreement, or
instrument executed or issued pursuant to this SECTION 6.15 shall be a Loan
Document.
6.16 LICENSES AND PERMITS. Borrower and each of its Subsidiaries shall
maintain all licenses and permits necessary to operate the Restaurants in the
manner in which they are currently operated other than to the extent such
Restaurant is closed in accordance with the definition of "Permitted
Disposition". Without limiting the generality of the foregoing, Borrower and its
Subsidiaries shall maintain valid and effective liquor licenses and other
permits as may be required to continue to sell alcoholic beverages at each
Restaurant and shall maintain their current standing with or rating by any
local, regional, or national board
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of health or other Governmental Authority other than to the extent such
Restaurant is closed in accordance with the definition of "Permitted
Disposition".
7. NEGATIVE COVENANTS.
Borrower covenants and agrees that, so long as any credit hereunder
shall be available and until payment in full of the Obligations (other than
contingent indemnification Obligations), Borrower will not and will not permit
any of its Subsidiaries to do any of the following:
7.1 INDEBTEDNESS. Create, incur, assume, suffer to exist, guarantee, or
otherwise become or remain, directly or indirectly, liable with respect to any
Indebtedness, except:
(a) Indebtedness evidenced by this Agreement and the other Loan
Documents, together with Indebtedness owed to Underlying Issuers with respect to
Underlying Letters of Credit,
(b) Indebtedness set forth on SCHEDULE 5.20,
(c) Permitted Purchase Money Indebtedness,
(d) refinancings, renewals, or extensions of Indebtedness
permitted under clauses (b) and (c) of this SECTION 7.1 (and continuance or
renewal of any Permitted Liens associated therewith) so long as: (i) such
refinancings, renewals, or extensions do not result in an increase in the then
extant principal amount of, or interest rate with respect to, the Indebtedness
so refinanced, renewed, or extended, (iii) such refinancings, renewals, or
extensions do not result in a shortening of the average weighted maturity of the
Indebtedness so refinanced, renewed, or extended, nor are they on terms or
conditions that, taken as a whole, are materially more burdensome or restrictive
to Borrower, (iv) if the Indebtedness that is refinanced, renewed, or extended
was subordinated in right of payment to the Obligations, then the terms and
conditions of the refinancing, renewal, or extension Indebtedness must include
subordination terms and conditions that are at least as favorable to Lender as
those that were applicable to the refinanced, renewed, or extended Indebtedness,
and (v) the Indebtedness that is refinanced, renewed, or extended is not
recourse to any Person that is liable on account of the Obligations other than
those Persons which were obligated with respect to the Indebtedness that was
refinanced, renewed, or extended,
(e) endorsement of instruments or other payment items for
deposit,
(f) Indebtedness composing Permitted Investments,
(g) Indebtedness represented by any notes issued pursuant to the
Indenture, including any Notes (or any other evidence of indebtedness for
borrowed money
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under the Notes or the Indenture) in an aggregate principal amount not to exceed
$105,000,000 at any one time outstanding,
(h) Hedge Agreements of Borrowers or any Subsidiary of Borrower
covering Indebtedness of Borrower or any of its Subsidiaries; provided, however,
that such Hedge Agreements are entered into for the purpose of fixing or hedging
interest rates with respect to any fixed or variable rate Indebtedness that is
not prohibited hereunder;
(i) Indebtedness of a Guarantor to Borrower or another Guarantor
or Indebtedness of Borrower to a Guarantor so long as such Indebtedness is
subordinated in right of payment to the Obligations and to the Guarantied
Obligations (as defined in the Guaranty);
(j) Indebtedness of a Foreign Subsidiary to another Foreign
Subsidiary;
(k) Indebtedness of Borrower or any of its Subsidiaries
represented by letters of credit for the account of Borrower or such Subsidiary,
as the case may be, in order to provide security for performance bonds, bankers'
acceptances, workers' compensation claims, surety and appeal bonds, and payment
obligations in connection with self-insurance or similar requirements incurred
in the ordinary course of business;
(l) Guarantees by Borrower or a Guarantor of Indebtedness
incurred by Borrower or a Guarantor so long as the incurrence of such
Indebtedness by Borrower or any such Guarantor is otherwise permitted by the
terms hereof and so long as such Indebtedness is subordinated in right of
payment to the Obligations and to the Guarantied Obligations (as defined in the
Guaranty);
(m) Indebtedness of Foreign Subsidiaries of Borrower to third
parties who are not Affiliates of Borrower or any Permitted Holder, in an
aggregate outstanding principal amount not to exceed $2.0 million;
(n) Indebtedness arising from agreements of Borrower or a
Subsidiary providing for the guarantee, indemnification, adjustment of purchase
price or similar obligations, in each case, incurred in connection with a
Permitted Disposition, other than guarantees of Indebtedness incurred by any
Person acquiring the assets or business that is the subject of the Permitted
Disposition; provided that the maximum liability in respect of any such
Indebtedness shall at no time exceed the gross proceeds actually received by
Borrower or the Subsidiary, as applicable, in connection with such Permitted
Disposition;
(o) Permitted Acquired Indebtedness not to exceed $5,000,000 in
the aggregate at any one time; and
(p) additional Indebtedness of Borrower and its Subsidiaries in
an aggregate principal amount not to exceed $3,000,000 million at any time
outstanding.
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7.2 LIENS. Create, incur, assume, or suffer to exist, directly or
indirectly, any Lien on or with respect to any of its assets, of any kind,
whether now owned or hereafter acquired, or any income or profits therefrom,
except for Permitted Liens (including Liens that are replacements of Permitted
Liens to the extent that the original Indebtedness is refinanced, renewed, or
extended under SECTION 7.1(d) and so long as the replacement Liens only encumber
those assets that secured the refinanced, renewed, or extended Indebtedness).
7.3 RESTRICTIONS ON FUNDAMENTAL CHANGES.
(a) Enter into any merger, consolidation, reorganization, or
recapitalization, or reclassify its Stock other than mergers and consolidations
of any Guarantor into a Guarantor or into Borrower.
(b) Liquidate, wind up, or dissolve itself (or suffer any
liquidation or dissolution) other than the liquidation, winding up or
dissolution of an Inactive Subsidiary or an Unprofitable Restaurant or any other
Restaurant permitted to be closed pursuant to the definition of "Permitted
Disposition", in each case solely to the extent that such liquidation, winding
up or dissolution is a Permitted Disposition.
(c) Convey, sell, lease, license, assign, transfer, or otherwise
dispose of, in one transaction or a series of transactions, all or any
substantial part of its assets other than the sale of assets of an Unprofitable
Restaurant or other Restaurant permitted to be closed pursuant to the definition
of "Permitted Disposition".
7.4 DISPOSAL OF ASSETS. Other than Permitted Dispositions, convey, sell,
lease, license, assign, transfer, or otherwise dispose of any of Borrower's or
its Subsidiaries, assets.
7.5 CHANGE NAME. Change Borrower's or any of its Subsidiaries' names,
XXXXx, organizational identification number, state of organizational or
organization identity; PROVIDED, HOWEVER, that Borrower or any of its
Subsidiaries may change its name upon at least 10 Business Days, prior written
notice to Lender of such change and so long as, at the time of such written
notification, Borrower or its Subsidiaries provides any financing statements
necessary to perfect and continue perfected the Lender's Liens.
7.6 NATURE OF BUSINESS. Make any change in the principal nature of its or
their business.
7.7 PREPAYMENTS AND AMENDMENTS.
Except in connection with a refinancing permitted by SECTION 7.1(d),
(a) prepay, redeem, defease, purchase, or otherwise acquire any
Indebtedness of Borrower or its Subsidiaries, other than the Obligations in
accordance with
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this Agreement and Indebtedness described in SECTION 7.1(c) and as otherwise set
forth on SCHEDULE 7.7(a), or
(b) directly or indirectly, amend, modify, alter, increase, or
change in any manner materially adverse to the Lender any of the terms or
conditions of any agreement, instrument, document, indenture, or other writing
evidencing or concerning Indebtedness permitted under SECTION 7.1(b) or (c).
7.8 CHANGE OF CONTROL. Cause, permit, or suffer, directly or indirectly,
any Change of Control.
7.9 [INTENTIONALLY OMITTED].
7.10 DISTRIBUTIONS. Make any distribution or declare or pay any dividends
(in cash or other property, other than common Stock) on, or purchase, acquire,
redeem, or retire any of Borrower's Stock, of any class, whether now or
hereafter outstanding , except for distributions to Parent to:
(a) pay indemnities (1) provided in the ordinary course of
Borrower's business for the benefit of employees, officers and directors of
Parent, as applicable, or (2) in connection with an acquisition permitted under
Section 7.13 to the extent (and only to the extent) that such indemnities would
have been permitted Indebtedness under SECTION 7.1(n), had they been incurred by
Borrower;
(b) pay reasonable severance compensation to officers and
employees of Parent upon termination in the ordinary course of business so long
as the representation contained in SECTION 5.24 is correct,
(c) permit Parent to contemporaneously redeem from current or
former employees or directors and their respective estates, spouses, former
spouses and heirs equity interests or warrants or options to acquire any equity
interests of the Parent up to an aggregate of not more than $1.0 million in any
fiscal year, plus up to $500,000 of any unused amount permitted under this
clause (c) for the immediately preceding year,
(d) pay outside directors' fees, reimbursement of actual
out-of-pocket expenses incurred in connection with attending board of director
meetings and indemnification claims to the extent not covered by insurance,
(e) pay administrative expenses, corporate overhead and taxes of
Parent so long as the representation contained in SECTION 5.24 is correct,
(f) repurchases of stock of Parent deemed to occur upon the
cashless exercise of stock options and warrants, and
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(g) permit Parent to pay management fees pursuant to the terms of
the Management Agreement.
7.11 ACCOUNTING METHODS. Modify or change its fiscal year or its method of
accounting (other than as may be required to conform to GAAP) or enter into,
modify, or terminate any agreement currently existing, or at any time hereafter
entered into with any third party accounting firm or service bureau for the
preparation or storage of Borrower's or its Subsidiaries' accounting records if
such accounting firm or service bureau does not agree to provide Lender the
communication and access required by SECTION 6.3.
7.12 INVESTMENTS. Except for Permitted Investments, directly or
indirectly, make or acquire any Investment or incur any liabilities (including
contingent obligations) for or in connection with any Investment; PROVIDED,
HOWEVER, that Borrower and its Subsidiaries shall not have Permitted Investments
consisting of cash, Cash Equivalents, deposit account balances or Investment
Property (other than in the Concentration Account) in Deposit Accounts or
Securities Accounts in an aggregate amount in excess of $100,000 outstanding at
any one time unless Borrower or its Subsidiary, as applicable, and the
applicable securities intermediary or bank have entered into Control Agreements
governing such Permitted Investments in order to perfect (and further establish)
the Lender's Liens in such Permitted Investments. Subject to the foregoing
proviso, Borrower shall not and shall not permit its Subsidiaries to establish
or maintain any Deposit Account or Securities Account unless Lender shall have
received a Control Agreement in respect of such Deposit Account or Securities
Account.
7.13 TRANSACTIONS WITH AFFILIATES. Directly or indirectly enter into or
permit to exist any transaction with any Affiliate of Borrower except for
transactions that are in the ordinary course of Borrower's business, upon fair
and reasonable terms, that are fully disclosed to Lender, and that are no less
favorable to Borrower than would be obtained in an arm's length transaction with
a non-Affiliate provided, however, that such restrictions shall not apply to:
(a) transactions exclusively between or among Borrower and any
Guarantor or exclusively between or among such Guarantors;
(b) payments pursuant to the Management Agreement to the extent
permitted under SECTION 7.10(g);
(c) arrangements with directors of Borrower existing on the
Closing Date as disclosed in SCHEDULE 7.13;
(d) any Permitted Acquisition from a non-Affiliate that is an
arm's length transaction and fails to comply with this section solely because
such a non-Affiliate becomes an Affiliate as a result of such Permitted
Acquisition;
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(e) any distribution or dividend permitted pursuant to Section
7.10;
(f) any Investment permitted pursuant to Section 7.12; and
(g) any sale of the Stock of Borrower in exchange for equity
contributions from Parent.
7.14 SUSPENSION. Suspend or go out of a substantial portion of its or
their business other than in connection with a Permitted Disposition.
7.15 [INTENTIONALLY OMITTED].
7.16 USE OF PROCEEDS. Use the proceeds of the Advances for any purpose
other than (a) on the Closing Date, to pay transactional fees, costs, and
expenses incurred in connection with this Agreement, the other Loan Documents
and the transactions contemplated hereby and thereby, and (b) thereafter,
consistent with the terms and conditions hereof, for its lawful and permitted
purposes.
7.17 INVENTORY AND EQUIPMENT WITH BAILEES. Except as set forth on SCHEDULE
7.17, Borrower or its Subsidiaries at any time now or hereafter with a bailee,
warehouseman, or similar party without Lender's prior written consent.
7.18 FINANCIAL COVENANTS. Fail to maintain or achieve TTM EBITDA, measured
on a month-end basis, of at least $16,000,000 as of the Closing Date and as of
the last date of each month thereafter.
8. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an event of
default (each, an "EVENT OF DEFAULT") under this Agreement:
8.1 If Borrower fails to pay when due and payable, or when declared due and
payable, all or any portion of the Obligations (whether of principal, interest
(including any interest which, but for the provisions of the Bankruptcy Code,
would have accrued on such amounts), fees and charges due Lender, reimbursement
of Lender Expenses, or other amounts constituting Obligations) PROVIDED,
HOWEVER, that in the case of Overadvances that are caused by the charging of
interest, fees, or Lender Expenses to the Loan Account, such event shall not
constitute an Event of Default if, within 3 Business Days of its receipt of
telephonic notice of such Overadvance, Borrower eliminates such Overadvance;
8.2 If Borrower or any Guarantor (a) fails to perform, keep, or observe any
term, provision, condition, covenant, or agreement contained in SECTIONS 2.7,
3.2, 4.2, 4.4, 4.6, 6.8, 6.12, 6.15 and 7.1 through 7.18 of this Agreement;
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(b) fails or neglects to perform, keep, or observe any term,
provision, covenant, or agreement contained in SECTIONS 4.5, 6.2, 6.3, 6.5, 6.6,
6.7, 6.9, 6.10, 6.11, and 6.14 of this Agreement and such failure continues for
a period of 5 Business Days; or
(c) fails or neglects to perform, keep, or observe any other term,
provision, covenant, or agreement contained in this Agreement, or in any of the
other Loan Documents (giving effect to any grace periods, cure periods, or
required notices, if any, expressly provided for in such Loan Documents); in
each case, other than any such term, provision, covenant, or agreement that is
the subject of another provision of this SECTION 8 (in which event such other
provision of this SECTION 8 shall govern), and such failure continues for a
period of 10 Business Days;
PROVIDED that, during any period of time that any such failure or
neglect referred to in this paragraph exists, even if such failure or neglect is
not yet an Event of Default, Lender shall be relieved of its obligation to
extend credit hereunder;
8.3 If any material portion of Borrower's or any of its Domestic
Subsidiaries' (other than Inactive Subsidiaries) assets is attached, seized,
subjected to a writ or distress warrant, levied upon, or comes into the
possession of any third Person;
8.4 If any Insolvency Proceeding is commenced:
(a) by Borrower or any of its Domestic Subsidiaries (other than
Inactive Subsidiaries).
(b) against Borrower or any of its Domestic Subsidiaries (other than
Inactive Subsidiaries), and any of the following events occur: (a) Borrower or
such Subsidiary consents to the institution of such Insolvency Proceeding
against it, (b) the petition commencing the Insolvency Proceeding is not timely
controverted; provided, however, that, during the pendency of such period,
Lender shall be relieved of its obligations to extend credit hereunder, (c) the
petition commencing the Insolvency Proceeding is not dismissed within 60
calendar days of the date of the filing thereof; provided, however, that, during
the pendency of such period, Lender shall be relieved of its obligations to
extend credit hereunder, (d) an interim trustee is appointed to take possession
of all or any substantial portion of the properties or assets of, or to operate
all or any substantial portion of the business of, Borrower or (e) an order for
relief shall have been entered therein.
(c) Notwithstanding the foregoing, the commencement of an Insolvency
Proceeding by or against any Inactive Subsidiary or up to three Restaurant
Subsidiaries shall not constitute an Event of Default so long as, in the case of
a Restaurant Subsidiary, such Restaurant Subsidiary's TTM EBITDA ending on the
date of the commencement of such proceeding is equal to or less than $250,000.
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8.5 If Borrower or any of its Domestic Subsidiaries (other than Inactive
Subsidiaries) is enjoined, restrained, or in any way prevented by court order
from continuing to conduct all or any material part of its business affairs;
8.6 (a) If a notice of Lien is filed of record with respect to Borrower's
or Guarantors' (other than an Inactive Subsidiaries) assets by the United States
or any department, agency, or instrumentality thereof (a "FEDERAL LIEN"), or by
any state, county, municipal, or governmental agency and such state, county,
municipal, or governmental agency Lien has priority over the Liens of Lender in
and to the Collateral or any portion thereof (a "NON-FEDERAL PRIORITY LIEN"); or
(b) If a notice of Lien is filed of record with respect to Borrowers'
assets or Guarantors' assets by any state, county, municipal, or governmental
agency that is not a Non-Federal Priority Lien (a "NON-FEDERAL NON-PRIORITY
LIEN"); PROVIDED, HOWEVER, that, if the aggregate amount claimed with respect to
any such Non-Federal Non-Priority Liens, or combination thereof, is less than
$100,000, an Event of Default shall not occur under this subsection if the
claims that are the subject of such Liens are the subject of Permitted Protests
and if the Liens are released, discharged, or bonded against within 30 days of
each such Lien first being filed of record or, if earlier, at least 5 days prior
to the date on which assets that are subject to such Liens are subject to being
sold or forfeited and, in any such case, Lender shall have the absolute right to
establish and maintain a reserve against the Borrowing Base and the Maximum
Revolver Amount in an amount equal to the aggregate amount of the underlying
claims (determined by Lender, in its Permitted Discretion, and irrespective of
any Permitted Protests with respect thereto and including any penalties or
interest that are estimated by Lender, in its Permitted Discretion, to arise in
connection therewith);
8.7 If one or more judgments or other claims involving an aggregate amount
of $500,000, or more, in excess of the amount covered by insurance becomes a
Lien or encumbrance upon any material portion of Borrower's assets and the same
is not released, discharged, bonded against or stayed pending appeal before the
earlier of 30 days after the date if first arises or 5 days prior to the date on
which such asset is subject to being forfeited by Borrower.
8.8 (a) If there is a default in any material agreement to which Borrower
or any Guarantor is a party with one or more, third Persons relative to
Borrowers' Indebtedness involving an aggregate amount of $500,000 or more and
such default (i) occurs at the final maturity of the obligations thereunder, or
(ii) results in a right by the other party thereto, irrespective of whether
exercised, to accelerate the maturity of Borrower's obligations thereunder, or
to terminate such agreement; or
(b) If there is a default in any other material agreement to which
Borrower or any Guarantor (that is not an Inactive Subsidiary or a Restaurant
permitted to be closed
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hereunder) is a party with one or more third Persons and such default results in
a right by such third Person(s), irrespective or whether exercised, to terminate
such agreement;
8.9 If Borrower or any of its Subsidiaries makes any payment on account of
Indebtedness that has been contractually subordinated in right of payment to the
payment of the Obligations, except to the extent such payment is permitted by
the terms of the subordination provisions applicable to such Indebtedness;
8.10 If any material misstatement or misrepresentation exists now or
hereafter in any warranty, representation, statement, or Record made to Lender
by Borrower, any Guarantor, or any officer, employee, agent, or director of
Borrower or any Guarantor;
8.11 If the obligation of any Guarantor under the Guaranty or under any
other Loan Document is limited or terminated by operation of law or by such
Guarantor thereunder;
8.12 If this Agreement or any other Loan Document that purports to create
a Lien, shall, for any reason, fail or cease to create a valid and perfected
and, except to the extent permitted by the terms hereof or thereof, first
priority Lien on or security interest in the Collateral covered hereby or
thereby; or
8.13 Any provision of any Loan Document shall at any time for any reason
be declared to be null and void, or the validity or enforceability thereof shall
be contested by Borrower or its Subsidiaries (other than Inactive Subsidiaries
or Restaurants permitted to be closed), or a proceeding shall be commenced by
Borrower or its Subsidiaries (other than Inactive Subsidiaries or Restaurants
permitted to be closed), or by any Governmental Authority having jurisdiction
over Borrower or its Subsidiaries (other than Inactive Subsidiaries or
Restaurants permitted to be closed), seeking to establish the invalidity or
unenforceability thereof, or Borrower or its Subsidiaries (other than Inactive
Subsidiaries or Restaurants permitted to be closed) shall deny that Borrower or
its Subsidiaries has any liability or obligation purported to be created under
any Loan Document to which such Person is a party.
9. LENDER'S RIGHTS AND REMEDIES.
9.1 RIGHTS AND REMEDIES. Upon the occurrence, and during the continuation,
of an Event of Default, Lender (except as specifically set forth herein, at its
election but without notice of its election and without demand) may do any one
or more of the following, all of which are authorized by Borrower:
(a) Concurrently with or following delivery of notice of such
election to Borrower, declare all Obligations, whether evidenced by this
Agreement, by any of the other Loan Documents, or otherwise, immediately due and
payable;
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(b) Cease advancing money or extending credit to or for the
benefit of Borrower under this Agreement, under any of the Loan Documents or
under any other agreement between Borrower and Lender;
(c) Terminate this Agreement and any of the other Loan Documents
as to any future liability or obligation of Lender, but without affecting any of
the Lender's Liens in the Collateral and without affecting the Obligations;
(d) Settle or adjust disputes and claims directly with Borrower's
or any Guarantor's Account Debtors for amounts and upon terms which Lender
considers advisable, and in such cases, Lender will credit Borrower's Loan
Account with only the net amounts received by Lender in payment of such disputed
Accounts after deducting all Lender Expenses incurred or expended in connection
therewith;
(e) [Intentionally Omitted]
(f) Without notice to or demand upon Borrower, make such payments
and do such acts as Lender considers necessary or reasonable in its Permitted
Discretion to protect its security interests in the Collateral. Borrower agrees
to assemble the Collateral if Lender so requires, and to make the Collateral
available to Lender at a place that Lender may designate which is reasonably
convenient to both parties. Borrower authorizes Lender to enter the premises
where the Collateral is located, to take and maintain possession of the
Collateral, or any part of it, and to pay, purchase, contest, or compromise any
Lien that in Lender's determination appears to conflict with the Lender's Liens
in and to the Collateral and to pay all expenses incurred in connection
therewith and to charge Borrower's Loan Account therefor. With respect to any of
Borrower's owned or leased premises, Borrower hereby grants to the fullest
extent permitted by law and binding contracts Lender a license to enter into
possession of such premises and to occupy the same, without charge, in order to
exercise any of Lender's rights or remedies provided herein, at law, in equity,
or otherwise;
(g) Without notice to Borrower (such notice being expressly
waived), and without constituting an acceptance of any collateral in full or
partial satisfaction of an obligation (within the meaning of the Code), set off
and apply to the Obligations any and all (i) balances and deposits of Borrower
held by Lender (including any amounts received in the Cash Management Accounts,
or (ii) Indebtedness at any time owing to or for the credit or the account of
Borrower held by Lender;
(h) Hold, as cash collateral, any and all balances and deposits
of Borrower held by Lender, and any amounts received in the Cash Management
Accounts, to secure the full and final repayment of all of the Obligations;
(i) Ship, reclaim, recover, store, finish, maintain, repair,
prepare for sale, advertise for sale, and sell (in the manner provided for
herein) the Borrower Collateral. Borrower hereby grants to Lender to the fullest
extent permitted by law and binding contracts
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a license or other right to use, without charge, Borrower's labels, patents,
copyrights, trade secrets, trade names, trademarks, service marks, and
advertising matter, or any property of a similar nature, as it pertains to the
Borrower Collateral, in completing production of, advertising for sale, and
selling any Borrower Collateral and Borrower's rights under all licenses and all
franchise agreements shall inure to Lender's benefit;
(j) Sell the Borrower Collateral at either a public or private
sale, or both, by way of one or more contracts or transactions, for cash or on
terms, in such manner and at such places (including Borrower's premises) as
Lender determines in its Permitted Discretion is commercially reasonable. It is
not necessary that the Borrower Collateral be present at any such sale;
(k) Lender shall give notice of the disposition of the Borrower
Collateral as follows:
(i) Lender shall give Borrower a notice in writing of the time
and place of public sale, or, if the sale is a private sale or some
other disposition other than a public sale is to be made of the
Borrower Collateral, the time on or after which the private sale or
other disposition is to be made; and
(ii) The notice shall be personally delivered or mailed,
postage prepaid, to Borrower as provided in SECTION 12, at least 10
days before the earliest time of disposition set forth in the notice;
no notice needs to be given prior to the disposition of any portion of
the Borrower Collateral that is perishable or threatens to decline
speedily in value or that is of a type customarily sold on a
recognized market;
(l) Lender may credit bid and purchase at any public sale;
(m) Lender may seek the appointment of a receiver or keeper to
take possession of all or any portion of the Borrower Collateral or to operate
same and, to the maximum extent permitted by law, may seek the appointment of
such a receiver without the requirement of prior notice or a hearing; and
(n) Lender shall have all other rights and remedies available at
law or in equity or pursuant to any other Loan Document; PROVIDED, HOWEVER, that
upon the occurrence of any Event of Default described in Section 8.4 or Section
8.5, in addition to the remedies set forth above, without any notice to Borrower
or any other Person or any act by the Lender, the Obligations then outstanding,
together with all accrued and unpaid interest thereon and all fees and all other
amounts due under this Agreement and the other Loan Documents, shall
automatically and immediately become due and payable, without presentment,
demand, protest, or notice of any kind, all of which are expressly waived by
Borrower.
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9.2 REMEDIES CUMULATIVE. The rights and remedies of Lender under this
Agreement, the other Loan Documents, and all other agreements shall be
cumulative. Lender shall have all other rights and remedies not inconsistent
herewith as provided under the Code, by law, or in equity. No exercise by Lender
of one right or remedy shall be deemed an election, and no waiver by Lender of
any Event of Default shall be deemed a continuing waiver. No delay by Lender
shall constitute a waiver, election, or acquiescence by it.
10. TAXES AND EXPENSES.
If Borrower fails to pay any monies (whether taxes, assessments,
insurance premiums, or, in the case of leased properties or assets, rents or
other amounts payable under such leases) due to third Persons, or fails to make
any deposits or furnish any required proof of payment or deposit, all as
required under the terms of this Agreement, then, Lender, in its sole discretion
and without prior notice to Borrower, may do any or all of the following: (a)
make payment of the same or any part thereof (except to the extent that the
validity of such assessment or tax is the subject of a Permitted Protest), (b)
set up such reserves in Borrower's Loan Account as Lender deems necessary to
protect Lender from the exposure created by such failure, or (c) in the case of
the failure to comply with SECTION 6.8 hereof, obtain and maintain insurance
policies of the type described in SECTION 6.8 and take any action with respect
to such policies as Lender deems prudent. Any such amounts paid by Lender shall
constitute Lender Expenses and any such payments shall not constitute an
agreement by Lender to make similar payments in the future or a waiver by Lender
of any Event of Default under this Agreement. Lender need not inquire as to, or
contest the validity of, any such expense, tax, or Lien and the receipt of the
usual official notice for the payment thereof shall be conclusive evidence that
the same was validly due and owing.
11. WAIVERS; INDEMNIFICATION.
11.1 DEMAND; PROTEST. Except as specifically provided herein and to the
extent permitted by applicable law, Borrower waives demand, protest, notice of
protest, notice of default or dishonor, notice of payment and nonpayment,
nonpayment at maturity, release, compromise, settlement, extension, or renewal
of documents, instruments, chattel paper, and guarantees at any time held by
Lender on which Borrower may in any way be liable.
11.2 LENDER'S LIABILITY FOR COLLATERAL. Borrower hereby agrees that: (a)
so long as Lender complies with its obligations, if any, under the Code, Lender
shall not in any way or manner be liable or responsible for: (i) the safekeeping
of the Borrower Collateral, (ii) any loss or damage thereto occurring or arising
in any manner or fashion from any cause, (iii) any diminution in the value
thereof, or (iv) any act or default of any carrier, warehouseman, bailee,
forwarding agency, or other Person, and (b) all risk of loss, damage, or
destruction of the Borrower Collateral shall be borne by Borrower except any
thereof resulting solely from the gross negligence, bad faith or willful
misconduct of any Lender-Related Person as finally determined by a court of
competent jurisdiction..
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11.3 INDEMNIFICATION. Borrower shall pay, indemnify, defend, and hold the
Lender-Related Persons, and each Participant (each, an "INDEMNIFIED PERSON")
harmless (to the fullest extent permitted by law) from and against any and all
claims, demands, suits, actions, investigations, proceedings, and damages, and
all reasonable attorneys fees and disbursements and other costs and expenses
actually incurred in connection therewith (as and when they are incurred and
irrespective of whether suit is brought), at any time asserted against, imposed
upon, or incurred by any of them (a) in connection with or as a result of or
related to the execution, delivery, enforcement, performance, or administration
(including any restructuring or workout with respect hereto) of this Agreement,
any of the other Loan Documents, or the transactions contemplated hereby or
thereby or the monitoring of Borrower's and its Subsidiaries' compliance with
the terms of the Loan Documents, and (b) with respect to any investigation,
litigation, or proceeding related to this Agreement, any other Loan Document, or
the use of the proceeds of the credit provided hereunder (irrespective of
whether any Indemnified Person is a party thereto), or any act, omission, event,
or circumstance in any manner related thereto (all the foregoing, collectively,
the "INDEMNIFIED LIABILITIES"). The foregoing to the contrary notwithstanding,
Borrower shall have no obligation to any Indemnified Person under this SECTION
11.3 with respect to any Indemnified Liability that a court of competent
jurisdiction finally determines to have resulted from the gross negligence or
willful misconduct of such Indemnified Person. This provision shall survive the
termination of this Agreement and the repayment of the Obligations. If any
Indemnified Person makes any payment to any other Indemnified Person with
respect to an Indemnified Liability as to which Borrower was required to
indemnify the Indemnified Person receiving such payment, the Indemnified Person
making such payment is entitled to be indemnified and reimbursed by Borrower
with respect thereto. WITHOUT LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO
EACH INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE
OR IN PART ARE CAUSED BY OR ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH
INDEMNIFIED PERSON OR OF ANY OTHER PERSON.
12. NOTICES.
Unless otherwise provided in this Agreement, all notices or demands by
Borrower or Lender to the other relating to this Agreement or any other Loan
Document shall be in writing and (except for financial statements and other
informational documents which may be sent by first-class mail, postage prepaid)
shall be personally delivered or sent by registered or certified mail (postage
prepaid, return receipt requested), overnight courier, electronic mail (at such
email addresses as Borrower or Lender, as applicable, may designate to each
other in accordance herewith), or telefacsimile to Borrower or Lender, as the
case may be, at its address set forth below:
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If to Borrower: XXXXXX'X RESTAURANT GROUP, INC.
000 Xxx Xxxx Xxxx Xxxx,
Xxx Xxxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxxxx
Fax No. 000-000-0000
If to Lender: XXXXX FARGO FOOTHILL, INC.
0000 Xxxxxxxx Xxxxxx
Xxxxx 0000 Xxxx
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Attn: Business Finance Manager
Fax No. 000-000-0000
with copies to: PAUL, HASTINGS, XXXXXXXX & XXXXXX LLP
000 Xxxxx Xxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx Xxxxxxx Hilson, Esq.
Fax No. 000.000.0000
Lender and Borrower may change the address at which they are to
receive notices hereunder, by notice in writing in the foregoing manner given to
the other party. All notices or demands sent in accordance with this SECTION 12,
other than notices by Lender in connection with enforcement rights against the
Borrower Collateral under the provisions of the Code, shall be deemed received
on the earlier of the date of actual receipt or 3 Business Days after the
deposit thereof in the mail. Borrower acknowledges and agrees that notices sent
by Lender in connection with the exercise of enforcement rights against Borrower
Collateral under the provisions of the Code shall be deemed sent when deposited
in the mail or personally delivered, or, where permitted by law, transmitted by
telefacsimile or any other method set forth above.
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
(UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT
OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT
HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH
RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR
THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
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(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND
LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE BOROUGH OF
MANHATTAN, STATE OF NEW YORK, PROVIDED, HOWEVER, THAT ANY SUIT SEEKING
ENFORCEMENT AGAINST ANY BORROWER COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT
LENDER'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE LENDER ELECTS TO BRING
SUCH ACTION OR WHERE SUCH BORROWER COLLATERAL OR OTHER PROPERTY MAY BE FOUND.
BORROWER AND LENDER WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY
RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT
TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION
13(b).
(c) BORROWER AND LENDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF
THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. BORROWER AND LENDER REPRESENT THAT EACH HAS REVIEWED THIS
WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
14.1 ASSIGNMENTS AND PARTICIPATIONS.
(a) Lender may assign and delegate to one or more assignees (each
an "ASSIGNEE") that are Eligible Transferees all, or any ratable part of all, of
the Obligations and the other rights and obligations of Lender hereunder and
under the other Loan Documents; PROVIDED, HOWEVER, that so long as no Default or
Event of Default has occurred and is continuing, (i) there may not exist any
more than three lenders at any one time, (ii) any such assignment must be of an
undivided percentage interest in all commitments and Obligations, in an amount
of at least $5,000,000, (iii) after giving effect to such assignment, Lender
shall hold a percentage interest of the total amount of commitments and
Obligations hereunder of not less that 51%, and (iv) Borrower may continue to
deal solely and directly with Lender in connection with the interest so assigned
to an Assignee until (x) written notice of such assignment, together with
payment instructions, addresses, and related information with respect to the
Assignee, have been given to Borrower by Lender and the Assignee, and (y) Lender
and its Assignee have delivered to Borrower an appropriate Assignment and
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Acceptance. Anything contained herein to the contrary notwithstanding, the
Assignee need not be an Eligible Transferee if such assignment is in connection
with any merger, consolidation, sale, transfer, or other disposition of all or
any substantial portion of the business or loan portfolio of Lender.
(b) From and after the date that Lender provides Borrower with
such written notice and executed assignment and acceptance, (i) the Assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such assignment and
acceptance, shall have the rights and obligations of a Lender under the Loan
Documents, and (ii) the Lender shall, to the extent that rights and obligations
hereunder and under the other Loan Documents have been assigned by it pursuant
to such assignment and acceptance, relinquish its rights (except with respect to
SECTION 11.3 hereof) and be released from any future obligations under this
Agreement (and in the case of an assignment and acceptance covering all or the
remaining portion of Lender's rights and obligations under this Agreement and
the other Loan Documents, such Lender shall cease to be a party hereto and
thereto), and such assignment shall effect a novation between Borrower and the
Assignee; PROVIDED, HOWEVER, that nothing contained herein shall release Lender
from obligations that survive the termination of this Agreement, including
Lender's obligations under SECTION 16.9 of this Agreement.
(c) Immediately upon Borrower's receipt of such fully executed
assignment and acceptance, this Agreement shall be deemed to be amended to the
extent, but only to the extent, necessary to reflect the addition of the
Assignee and the resulting adjustment of the rights and duties of Lender arising
therefrom and all determinations to be made by Lender hereunder may be made in
any manner agreed to between Lender and any such Assignees.
(d) Lender may at any time sell to one or more commercial banks,
financial institutions, or other Persons not Affiliates of such Lender (a
"PARTICIPANT") participating interests in the Obligations and the other rights
and interests of Lender hereunder and under the other Loan Documents; PROVIDED,
HOWEVER, that (i) Lender shall remain the "Lender" for all purposes of this
Agreement and the other Loan Documents and the Participant receiving the
participating interest in the Obligations and the other rights and interests of
Lender hereunder shall not constitute a "Lender" hereunder or under the other
Loan Documents and Lender's obligations under this Agreement shall remain
unchanged, (ii) Lender shall remain solely responsible for the performance of
such obligations, (iii) Borrower and the Lender shall continue to deal solely
and directly with each other Lender in connection with Lender's rights and
obligations under this Agreement and the other Loan Documents, (iv) Lender shall
not transfer or grant any participating interest under which the Participant has
the right to approve any amendment to, or any consent or waiver with respect to,
this Agreement or any other Loan Document, except to the extent such amendment
to, or consent or waiver with respect to this Agreement or of any other Loan
Document would (A) extend the final maturity date of the Obligations hereunder
in which
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such Participant is participating, (B) reduce the interest rate applicable to
the Obligations hereunder in which such Participant is participating, (C)
release all or substantially all of the Collateral or guaranties (except to the
extent expressly provided herein or in any of the Loan Documents) supporting the
Obligations hereunder in which such Participant is participating, (D) postpone
the payment of, or reduce the amount of, the interest or fees payable to such
Participant through Lender, or (E) change the amount or due dates of scheduled
principal repayments or prepayments or premiums, and (v) all amounts payable by
Borrower hereunder shall be determined as if Lender had not sold such
participation, except that, if amounts outstanding under this Agreement are due
and unpaid, or shall have been declared or shall have become due and payable
upon the occurrence of an Event of Default, each Participant shall be deemed to
have the right of set-off in respect of its participating interest in amounts
owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as Lender under this Agreement.
The rights of any Participant only shall be derivative through Lender and no
Participant shall have any rights under this Agreement or the other Loan
Documents or any direct rights as to Borrower, the Collections of Borrower or
its Subsidiaries, the Collateral, or otherwise in respect of the Obligations. No
Participant shall have the right to participate directly in the making of
decisions by Lender.
(e) In connection with any such assignment or participation or
proposed assignment or participation, Lender may, subject to the provisions of
SECTION 16.9, disclose all documents and information which it now or hereafter
may have relating to Borrower and its Subsidiaries and their respective
businesses.
(f) Any other provision in this Agreement notwithstanding, Lender
may at any time create a security interest in, or pledge, all or any portion of
its rights under and interest in this Agreement in favor of any Federal Reserve
Bank in accordance with Regulation A of the Federal Reserve Bank or U.S.
Treasury Regulation 31 CFR Section 203.24, and such Federal Reserve Bank may
enforce such pledge or security interest in any manner permitted under
applicable law.
14.2 SUCCESSORS. This Agreement shall bind and inure to the benefit of the
respective successors and assigns of each of the parties; PROVIDED, HOWEVER,
that Borrower may not assign this Agreement or any rights or duties hereunder
without Lender's prior written consent and any prohibited assignment shall be
absolutely void AB INITIO. No consent to assignment by Lender shall release
Borrower from its Obligations. Lender may assign this Agreement and the other
Loan Documents and its rights and duties hereunder and thereunder pursuant to
SECTION 14.1 hereof and, except as expressly required pursuant to SECTION 14.1
hereof, no consent or approval by Borrower is required in connection with any
such assignment.
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15. AMENDMENTS; WAIVERS.
15.1 AMENDMENTS AND WAIVERS. No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent with respect to any
departure by Borrower or Lender therefrom, shall be effective unless the same
shall be in writing and signed by Lender (or to the extent there is more than
one Lender, by Lenders holding not less than 51% of the Obligations then
outstanding) and Borrower and then any such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.
15.2 NO WAIVERS; CUMULATIVE REMEDIES. No failure by Lender to exercise any
right, remedy, or option under this Agreement or any other Loan Document, or
delay by Lender in exercising the same, will operate as a waiver thereof. No
waiver by Lender will be effective unless it is in writing, and then only to the
extent specifically stated. No waiver by Lender on any occasion shall affect or
diminish Lender's rights thereafter to require strict performance by Borrower of
any provision of this Agreement. Lender's rights under this Agreement and the
other Loan Documents will be cumulative and not exclusive of any other right or
remedy that Lender may have.
16. GENERAL PROVISIONS.
16.1 EFFECTIVENESS. This Agreement shall be binding and deemed effective
when executed by Borrower and Lender.
16.2 SECTION HEADINGS. Headings and numbers have been set forth herein for
convenience only. Unless the contrary is compelled by the context, everything
contained in each Section applies equally to this entire Agreement.
16.3 INTERPRETATION. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed against Lender or Borrower, whether under
any rule of construction or otherwise. On the contrary, this Agreement has been
reviewed by all parties and shall be construed and interpreted according to the
ordinary meaning of the words used so as to accomplish fairly the purposes and
intentions of all parties hereto.
16.4 SEVERABILITY OF PROVISIONS. Each provision of this Agreement shall be
severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.
16.5 WITHHOLDING TAXES. All payments made by Borrower hereunder or under
any note will be made without setoff, counterclaim, or other defense, except as
required by applicable law other than for Taxes (as defined below). All such
payments will be made free and clear of, and without deduction or withholding
for, any present or future taxes, levies, imposts, duties, fees, assessments or
other charges of whatever nature now or hereafter imposed by any jurisdiction
(other than the United States) or by any political subdivision or
-83-
taxing authority thereof or therein (other than of the United States) with
respect to such payments (but excluding, any tax imposed by any jurisdiction or
by any political subdivision or taxing authority thereof or therein (i) measured
by or based on the net income or net profits of Lender, or (ii) to the extent
that such tax results from a change in the circumstances of Lender, including a
change in the residence, place of organization, or principal place of business
of Lender, or a change in the branch or lending office of Lender participating
in the transactions set forth herein) and all interest, penalties or similar
liabilities with respect thereto (all such non-excluded taxes, levies, imposts,
duties, fees, assessments or other charges being referred to collectively as
"TAXES"). If any Taxes are so levied or imposed, Borrower agrees to pay the full
amount of such Taxes, and such additional amounts as may be necessary so that
every payment of all amounts due under this Agreement or under any note,
including any amount paid pursuant to this SECTION 16.5 after withholding or
deduction for or on account of any Taxes, will not be less than the amount
provided for herein; PROVIDED, HOWEVER, that Borrower shall not be required to
increase any such amounts payable to Lender if the increase in such amount
payable results from Lender's own willful misconduct or gross negligence.
Borrower will furnish to Lender as promptly as possible after the date the
payment of any Taxes is due pursuant to applicable law certified copies of tax
receipts evidencing such payment by Borrower.
16.6 AMENDMENTS IN WRITING. This Agreement only can be amended by a
writing signed by Lender and Borrower.
16.7 COUNTERPARTS; TELEFACSIMILE EXECUTION. This Agreement may be executed
in any number of counterparts and by different parties on separate counterparts,
each of which, when executed and delivered, shall be deemed to be an original,
and all of which, when taken together, shall constitute but one and the same
Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile shall be equally as effective as delivery of an original executed
counterpart of this Agreement. Any party delivering an executed counterpart of
this Agreement by telefacsimile also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement. The foregoing shall apply to each other Loan Document MUTATIS
MUTANDIS.
16.8 REVIVAL AND REINSTATEMENT OF OBLIGATIONS. If the incurrence or
payment of the Obligations by Borrower or a Guarantor or the transfer to Lender
of any property should for any reason subsequently be declared to be void or
voidable under any state or federal law relating to creditors' rights, including
provisions of the Bankruptcy Code relating to fraudulent conveyances,
preferences, or other voidable or recoverable payments of money or transfers of
property (collectively, a "VOIDABLE TRANSFER"), and if Lender is required to
repay or restore, in whole or in part, any such Voidable Transfer, or elects to
do so upon the reasonable advice of its counsel, then, as to any such Voidable
Transfer, or the amount thereof that Lender is required or elects to repay or
restore, and as to all reasonable costs, expenses, and attorneys fees of Lender
related thereto, the liability of Borrower or a
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Guarantor automatically shall be revived, reinstated, and restored and shall
exist as though such Voidable Transfer had never been made.
16.9 CONFIDENTIALITY.
Lender agrees that material, non-public information regarding Borrower
and its Subsidiaries, their operations, assets, and existing and contemplated
business plans shall be treated by Lender in a confidential manner, and shall
not be disclosed by Lender to Persons who are not parties to this Agreement,
except: (a) to attorneys for and other advisors, accountants, auditors, and
consultants to Lender, (b) to Subsidiaries and Affiliates of Lender (including
the Bank Product Providers), provided that any such Subsidiary or Affiliate
shall have agreed to receive such information hereunder subject to the terms of
this SECTION 16.9, (c) as may be required by statute, decision, or judicial or
administrative order, rule, or regulation, (d) as may be agreed to in advance by
Borrower or its Subsidiaries or as requested or required by any Governmental
Authority pursuant to any subpoena or other legal process, (e) as to any such
information that is or becomes generally available to the public (other than as
a result of prohibited disclosure by Lender), (f) in connection with any
assignment, prospective assignment, sale, prospective sale, participation or
prospective participations, or pledge or prospective pledge of Lender's interest
under this Agreement, provided that any such assignee, prospective assignee,
purchaser, prospective purchaser, participant, prospective participant, pledgee,
or prospective pledgee shall have agreed in writing to receive such information
hereunder subject to the terms of this Section, and (g) in connection with any
litigation or other adversary proceeding involving parties hereto which such
litigation or other adversary proceeding involving parties hereto with such
litigation or adversary proceeding involves claims related to the rights or
duties of such parties under this Agreement or the other Loan Documents. The
provisions of this SECTION 16.9 shall survive for 2 years after the payment in
full of the Obligations. Anything contained herein or in any other Loan Document
to the contrary notwithstanding, the obligations of confidentiality contained
herein and therein, as they relate to the transactions contemplated hereby,
shall not apply to the federal tax structure or federal tax treatment of such
transactions, and each party hereto (and any employee, representative, or agent
of any party hereto) may disclose to any and all Persons, without limitation of
any kind, the federal tax structure and federal tax treatment of such
transactions (including all written materials related to such tax structure and
tax treatment). The preceding sentence is intended to cause the transactions
contemplated hereby to not be treated as having been offered under conditions of
confidentiality for purposes of Section 1.6011-4(b)(3) (or any successor
provision) of the Treasury Regulations promulgated under Section 6011 of the
IRC, and shall be construed in a manner consistent with such purpose. In
addition, each party hereto acknowledges that it has no proprietary or exclusive
rights to the tax structure of the transactions contemplated hereby or any tax
matter or tax idea related thereto.
16.10 INTEGRATION. This Agreement, together with the other Loan Documents,
reflects the entire understanding of the parties with respect to the
transactions contemplated
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hereby and shall not be contradicted or qualified by any other agreement, oral
or written, before the date hereof.
[Signature page to follow.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered as of the date first above written.
XXXXXX'X RESTAURANT GROUP, INC.,
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------
Title: EVP & CFO
XXXXX FARGO FOOTHILL, INC.,
a California corporation
By: /s/ Xxxx Xxxxxx
-----------------
Title: Vice President
S-1
1. DEFINITIONS AND CONSTRUCTION..........................................................1
1.1 Definitions.....................................................................1
1.2 Accounting Terms...............................................................24
1.3 Code...........................................................................24
1.4 Construction...................................................................24
1.5 Schedules and Exhibits.........................................................25
2. LOAN AND TERMS OF PAYMENT............................................................25
2.1 Revolver Advances..............................................................25
2.2 [Intentionally Omitted]........................................................25
2.3 Borrowing Procedures and Settlements...........................................25
2.4 Payments.......................................................................26
2.5 Overadvances...................................................................28
2.6 Interest Rates and Letter of Credit Fee: Rates, Payments, and Calculations....28
2.7 Cash Management................................................................29
2.8 Crediting Payments.............................................................31
2.9 Designated Account.............................................................31
2.10 Maintenance of Loan Account; Statements of Obligations.........................31
2.11 Fees...........................................................................32
2.12 Letters of Credit..............................................................32
2.13 LIBOR Option...................................................................35
2.14 Capital Requirements...........................................................37
3. CONDITIONS; TERM OF AGREEMENT........................................................38
3.1 Conditions Precedent to the Initial Extension of Credit........................38
3.2 Conditions Subsequent to the Initial Extension of Credit.......................41
3.3 Conditions Precedent to all Extensions of Credit...............................41
3.4 Term...........................................................................42
3.5 Effect of Termination..........................................................42
3.6 Early Termination by Borrower..................................................42
4. CREATION OF SECURITY INTEREST........................................................43
4.1 Grant of Security Interest.....................................................43
4.2 Negotiable Collateral..........................................................43
4.3 Filing of Financing Statements; Commercial Tort Claims; Delivery of
Additional Documentation Required..............................................43
4.4 Power of Attorney..............................................................44
4.5 Right to Inspect...............................................................45
4.6 Control Agreements.............................................................45
5. REPRESENTATIONS AND WARRANTIES.......................................................46
5.1 No Encumbrances................................................................46
5.2 [Intentionally Omitted]........................................................46
5.3 [Intentionally Omitted]........................................................46
5.4 Equipment......................................................................46
5.5 Location of Inventory and Equipment............................................46
5.6 Inventory Records..............................................................46
5.7 State of Incorporation; Location of Chief Executive Office; FEIN;
Organizational ID Number; Commercial Tort Claims...............................46
5.8 Due Organization and Qualification; Subsidiaries...............................47
5.9 Due Authorization; No Conflict.................................................47
5.10 Litigation.....................................................................49
5.11 No Material Adverse Change.....................................................49
5.12 Fraudulent Transfer............................................................49
5.13 Employee Benefits..............................................................50
5.14 Environmental Condition........................................................50
5.15 Brokerage Fees.................................................................50
5.16 Intellectual Property..........................................................50
5.17 Leases.........................................................................50
5.18 Deposit Accounts and Securities Accounts.......................................51
5.19 Complete Disclosure............................................................51
5.20 Indebtedness...................................................................51
5.21 Real Property..................................................................51
5.22 Franchises.....................................................................52
6. AFFIRMATIVE COVENANTS................................................................52
6.1 Accounting System..............................................................52
6.2 Collateral Reporting...........................................................52
6.3 Financial Statements, Reports, Certificates....................................53
6.4 Guarantor Reports..............................................................55
6.5 [Intentionally Omitted]........................................................55
6.6 Maintenance of Properties......................................................55
6.7 Taxes..........................................................................55
6.8 Insurance......................................................................55
6.9 Location of Inventory and Equipment............................................56
6.10 Compliance with Laws...........................................................56
6.11 Leases.........................................................................56
6.12 Existence......................................................................57
6.13 Environmental..................................................................57
6.14 Disclosure Updates.............................................................57
6.15 Formation of Subsidiaries......................................................57
6.16 Licenses and Permits...........................................................58
7. NEGATIVE COVENANTS...................................................................58
7.1 Indebtedness...................................................................58
7.2 Liens..........................................................................60
7.3 Restrictions on Fundamental Changes............................................60
7.4 Disposal of Assets.............................................................60
7.5 Change Name....................................................................60
7.6 Nature of Business.............................................................60
7.7 Prepayments and Amendments.....................................................61
7.8 Change of Control..............................................................61
7.9 Distributions..................................................................61
7.10 Accounting Methods.............................................................62
7.11 Investments....................................................................62
7.12 Transactions with Affiliates...................................................62
7.13 Suspension.....................................................................63
7.14 Compensation...................................................................63
7.15 Use of Proceeds................................................................63
7.16 Inventory and Equipment with Bailees...........................................63
7.17 Financial Covenants............................................................63
8. EVENTS OF DEFAULT....................................................................64
9. LENDER'S RIGHTS AND REMEDIES.........................................................67
9.1 Rights and Remedies............................................................67
9.2 Remedies Cumulative............................................................69
10. TAXES AND EXPENSES...................................................................69
11. WAIVERS; INDEMNIFICATION.............................................................69
11.1 Demand; Protest................................................................69
11.2 Lender's Liability for Collateral..............................................69
11.3 Indemnification................................................................70
12. NOTICES..............................................................................70
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER...........................................71
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS...........................................72
14.1 Assignments and Participations.................................................72
14.2 Successors.....................................................................74
15. AMENDMENTS; WAIVERS..................................................................74
15.1 Amendments and Waivers.........................................................74
15.2 No Waivers; Cumulative Remedies................................................74
16. GENERAL PROVISIONS...................................................................75
16.1 Effectiveness..................................................................75
16.2 Section Headings...............................................................75
16.3 Interpretation.................................................................75
16.4 Severability of Provisions.....................................................75
16.5 Withholding Taxes..............................................................75
16.6 Amendments in Writing..........................................................76
16.7 Counterparts; Telefacsimile Execution..........................................76
16.8 Revival and Reinstatement of Obligations.......................................76
16.9 Confidentiality................................................................76
16.10 Integration....................................................................77
EXHIBITS AND SCHEDULES
Exhibit C-1 Form of Compliance Certificate
Exhibit L-1 Form of LIBOR Notice
Schedule C-1 Concentration Account
Schedule D-1 Designated Account
Schedule E-1 Third Party Appraisers
Schedule I-1 Inactive Subsidiaries
Schedule L-1 Lender's Account
Schedule P-1 Permitted Liens
Schedule P-2 Sale Leaseback
Schedule P-3 Investments
Schedule R-1 Real Property Collateral
Schedule 2.7(a) Cash Management Banks
Schedule 3.2(h) Additional Conditions Subsequent
Schedule 5.5 Locations of Inventory and Equipment
Schedule 5.7(a) States of Organization
Schedule 5.7(b) Chief Executive Offices
Schedule 5.7(c) XXXXx
Schedule 5.7(d) Commercial Tort Claims
Schedule 5.8(b) Capitalization of Borrower
Schedule 5.8(c) Capitalization of Borrower's Subsidiaries
Schedule 5.10 Litigation
Schedule 5.13 Employee Benefits
Schedule 5.14 Environmental Matters
Schedule 5.16 Intellectual Property
Schedule 5.17 Leases
Schedule 5.18 Deposit Accounts and Securities Accounts
Schedule 5.20 Permitted Indebtedness
Schedule 5.21 Real Property
Schedule 5.25 Credit Card Processors
Schedule 7.7(a) Prepayments
Schedule 7.13 Affiliate Transactions
Schedule 7.17 Inventory & Equipment with Bailees
